Question 2

A firm plans to invest $150,000 in a project that will generate the following cash flows over 5 years. The cost of capital is 10%. Calculate the NPV, discounted payback period, and profitability index.

Cash Flows:

Year	Cash Flow ($)
1	40,000
2	50,000
3	30,000
4	20,000
5	10,000

Requirements:

1. Calculate the NPV.
2. Determine the discounted payback period.
3. Calculate the Profitability Index (PI).
4. Provide a recommendation based on the results.