NPV, IRR, Payback period and capital budgeting 15. Describe the Net Present Value, Internal Rate of Return, Payback Period, and Profitability Index decision rules to accept or reject an investment project. 16. What is the payback period for an investment that costs $5,000 up front and produces additional profits of $800 a year? 17. What is the NPV of a project that has an initial cost of $500,000 and brings in an extra $120,000 a year for 5 years given a discount rate of 12%? 18. What is the Internal Rate of Return (IRR) and the Profitability Index (PI) of the project in number 14? 19. What are mutually exclusive projects? When it comes to mutually exclusive projects which measure is preferred between IRR and NPV? Why? 20. What would you think if your IRR is less that the discount rate of a project? What about if the Profitability index is less than 1