Problem:
Jeremy Yospin Inc. has an investment project that has annual cash flows of $8,800, $ 9,000, $10,000, $8,700 and $9,500 in next five years, and a discount rate of 10%.
Required:
Question 1: Find out the payback period, Discounted Payback period, NPV, and profitability index if the initial cost is $28,000. Should the company consider investing in the project?
Question 2: Find out the payback period, Discounted Payback period, NPV, and profitability index if the initial cost is $35,000. Should the company consider investing in the project?
Note: Show supporting computations in good form.