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A company is evaluating a project that involves a capital expenditure of $1,000,000. The project has a lifespan of 9 years and will have no

A company is evaluating a project that involves a capital expenditure of $1,000,000. The project has a lifespan of 9 years and will have no salvage value. It will generate annual net cash flows of $180,000. The company's tax rate is 40%. The present value factors for 9 years are given below:

Discount Rate

Cumulative Factors

8%

6.247

10%

5.759

12%

5.328

14%

4.946

16%

4.605

Requirements:

  1. Compute the NPV at each discount rate.
  2. Find the IRR of the project.
  3. Evaluate the profitability index for the project.
  4. Discuss the project's financial viability based on the calculated metrics.

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