Background:

Home Goods Ltd. is considering an expansion project which will require an investment of $500,000. The project is expected to generate the following cash flows:

•Year 1: $80,000

•Year 2: $120,000

•Year 3: $150,000

•Year 4: $200,000

•Year 5: $220,000

The company's cost of capital is 12%.

Requirements:

1.Calculate the NPV.

2.Calculate the IRR.

3.Determine the Payback Period.

4.Calculate the Discounted Payback Period.

5.Analyze the potential impact of changing the discount rate to 15%.