A pharmaceutical company is evaluating a new drug development project:
Initial Investment: $1,000,000
Net Cash Inflows:
•Year 1: $200,000
•Year 2: $300,000
•Year 3: $400,000
•Year 4: $500,000
•Year 5: $600,000
Discount Rate: 9%
Requirements:
1.Calculate the Payback Period.
2.Determine the NPV.
3.Compute the IRR.
4.Assess the profitability index.
5.Conduct a scenario analysis with a 5% decrease in net cash inflows.