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A company is evaluating an investment in new equipment that costs $10,000 and is expected to generate the following cash inflows over five years: Year

A company is evaluating an investment in new equipment that costs $10,000 and is expected to generate the following cash inflows over five years:

  • Year 1: $2,500
  • Year 2: $3,000
  • Year 3: $3,500
  • Year 4: $4,000
  • Year 5: $4,500

Requirements:

  1. Calculate the NPV at a discount rate of 10%.
  2. Determine the Payback Period.
  3. Calculate the Profitability Index (PI).
  4. Assess if the project is financially viable based on the NPV and PI.

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