A company plans to introduce a new product and needs to evaluate its feasibility:

• Initial cost: £700,000
• Expected cash inflows over five years:
  • Year 1: £150,000
  • Year 2: £170,000
  • Year 3: £190,000
  • Year 4: £210,000
  • Year 5: £230,000
• Depreciation: 20% on Written Down Value basis
• Cost of capital: 11%
• Scrap value: £40,000
• Zero corporate tax

Required:

1. Calculate the NPV.
2. Determine the IRR.
3. Compute the payback period.
4. Assess the profitability index.
5. Recommend whether to invest in the new product based on the analysis.