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A tech company is considering a project that involves a capital expenditure of $850,000. The project is expected to generate the following cash inflows: Year

A tech company is considering a project that involves a capital expenditure of $850,000. The project is expected to generate the following cash inflows:

  • Year 1: $200,000
  • Year 2: $250,000
  • Year 3: $300,000
  • Year 4: $350,000
  • Year 5: $400,000

Requirements:

  1. Calculate the payback period.
  2. Compute the NPV using a discount rate of 11%.
  3. Compute the IRR.
  4. Determine the project's profitability index.
  5. Decide whether the project should be undertaken.

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