A project has a required return of 12% and the following cash flows:

Year Cash Flow

0 -$2,200

1 1,000

2 700

3 800

a) Calculate the Net Present Value of the project. (4 points)

b) Calculate the Profitability Index of the project. (1 point)

.c) Based on its Net Present Value in (a), should you accept this project? Why or

why not? (2 points)

d) Based on its Profitability Index in (b), should you accept this project? Why or

why not? (2 points)