A project has a cost of $60,000, and annual cash flows as shown.
Year 0: -60,000 Year 1: 18,500 Year 2: 22,000 Year 3: 33,500 Year 4: 55,000
a. Assuming a required return of 10%, what is the NPV of the project? Should you accept it?
b. Assuming a required return of 10%, what is the IRR of the project? Should you accept it?
c. What is the payback period of the project? If the required payback period is 3 years, should you accept it?
d. Assuming a required return of 10%, what is the discounted payback period of the project? If the required payback period is 3 years, should you accept it?
e. Assuming a required return of 10%, what is the profitability index of the project? Should you accept it?