1. ETP Co. has an investment opportunity costing ( initial investment) ($120,000) that is expected to yield the following cash flows over the next ten years: (a negative number means a cash outflow)

Year 1: $24,000

Year 2: $27,000

Year 3: $24,000

Year 4: $30,000

Year 5: $39,000

Disinvestment payment at Year 5: ($9,000) This is a negative number

1. Find the NPVof the investment at a discount rate of 10%.

2. Does this capital project appear to be a favorable investment based on NPV? Why or Why Not?

3. What is the profitability Index of this project

4. If a second project (X) with an initial investment of $50,000 which has a profitability index of 1.85 was also being considered, which project (ETP or X) would be best and why?