A telecommunications company is considering expanding its network infrastructure. The following are the projected cash flows:

Initial Investment: $1,500,000

Yearly Cash Inflows:

•Year 1: $300,000

•Year 2: $400,000

•Year 3: $500,000

•Year 4: $600,000

•Year 5: $700,000

Discount Rate: 11%

Requirements:

1.Calculate the payback period.

2.Determine the net present value (NPV).

3.Compute the internal rate of return (IRR).

4.Evaluate the project’s profitability index (PI).

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