Q4

A company plans to launch a new product which requires an initial investment of $600,000. The product is expected to generate the following cash flows over its 5-year life:

Year	Cash Flow ($)
1	150,000
2	160,000
3	170,000
4	180,000
5	190,000

The company’s required rate of return is 10%. The present value factors for 10% are:

Year	PV Factor
1	0.909
2	0.826
3	0.751
4	0.683
5	0.621

Requirements:

1. Calculate the NPV of the project.
2. Determine the profitability index (PI).
3. What is the discounted payback period?
4. Compute the IRR for the project.
5. Explain whether the project should be accepted based on NPV and IRR.