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A firm is evaluating an investment that has the following cash flow projections: Year Cash Flows ($) DF (8%) 0 (150,000) 1.000 1 30,000 0.926

A firm is evaluating an investment that has the following cash flow projections:

Year

Cash Flows ($)

DF (8%)

0

(150,000)

1.000

1

30,000

0.926

2

40,000

0.857

3

50,000

0.794

4

60,000

0.735

5

70,000

0.681

Requirements:

  1. Calculate the NPV of the project.
  2. Determine the IRR.
  3. Compute the profitability index.
  4. Assess the discounted payback period.
  5. Evaluate the acceptability of the project based on the NPV and IRR.

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