Capital Budgeting
•Year 0: Initial Investment: -$7,000,000
•Year 1: Cash Flow: $2,500,000
•Year 2: Cash Flow: $3,000,000
•Year 3: Cash Flow: -$1,000,000
Requirements:
1.Draw the NPV profile for the project.
2.Compute the IRR.
3.Calculate the NPV with a 10% discount rate.
4.Assess the acceptability of the project if the cost of capital is 10%.