Question
OPQ Corporation is considering an investment in new technology that requires an initial outlay of $400,000. The expected cash flows from the technology are $80,000
OPQ Corporation is considering an investment in new technology that requires an initial outlay of $400,000. The expected cash flows from the technology are $80,000 annually for seven years. Determine the profitability index (PI) given a discount rate of 6%.
Requirements:
•Calculate the profitability index (PI).
•Determine the net present value (NPV).
•Find the internal rate of return (IRR).
•Assess the investment's desirability based on PI and NPV.
•Calculate the total cash inflows over the project life.
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