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MNO Corporation is considering a project that requires an initial outlay of $750,000 and will produce the following cash inflows: Year 1: $200,000 Year 2:

MNO Corporation is considering a project that requires an initial outlay of $750,000 and will produce the following cash inflows:

  • Year 1: $200,000
  • Year 2: $220,000
  • Year 3: $240,000
  • Year 4: $260,000
  • Year 5: $280,000

Requirements:

  1. Compute the payback period.
  2. Calculate the NPV at a discount rate of 11%.
  3. Calculate the IRR.
  4. Compute the profitability index.
  5. Assess whether MNO Corporation should undertake the project.

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