Cash Flow Forecasting

A business plans to invest in a project with the following cash flows:

• Initial outlay: $80,000
• Year 1: $30,000
• Year 2: $40,000
• Year 3: $50,000
• Year 4: $20,000

Discount rate is 7%.

Requirements:

1. Calculate the NPV.
2. Determine the IRR.
3. Compute the discounted payback period.
4. Analyze the project’s profitability index.