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A company is considering an investment that requires an initial outlay of $20,000. The expected cash inflows are $5,000 in the first year, $6,000 in

A company is considering an investment that requires an initial outlay of $20,000. The expected cash inflows are $5,000 in the first year, $6,000 in the second year, $7,000 in the third year, and $8,000 in the fourth and fifth years. The company's required rate of return is 9%.

Requirements:

  1. Calculate the NPV of the project.
  2. Determine the IRR.
  3. Compute the Modified Internal Rate of Return (MIRR).
  4. Find the Payback Period.
  5. Decide if the project should be undertaken based on the financial metrics calculated.

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