An agricultural business is evaluating a new harvesting equipment:
•Initial cost: $120,000
•Annual cash inflows:
oYear 1: $30,000
oYear 2: $40,000
oYear 3: $50,000
oYear 4: $60,000
oYear 5: $70,000
Discount rate: 7%
Requirements:
1.Calculate the Payback Period.
2.Determine the NPV.
3.Compute the IRR.
4.Assess the profitability index.
5.Perform a risk analysis with a 10% decrease in cash inflows.