ExxonMobil is evaluating a new project with the following cash flows:
•Initial investment: $1,000,000
•Year 1: $300,000
•Year 2: $400,000
•Year 3: $500,000
•Year 4: $600,000
The required rate of return is 10%.
Required:
1.Calculate the Net Present Value (NPV) of the project.
2.Determine the Internal Rate of Return (IRR).
3.Discuss the decision rule for NPV and IRR in capital budgeting.