Question 2

XYZ Corporation is evaluating a project that requires an initial investment of $500,000 and will generate the following cash inflows:

• Year 1: $120,000
• Year 2: $150,000
• Year 3: $200,000
• Year 4: $220,000
• Year 5: $240,000

The company's cost of capital is 10%. Calculate the following:

1. Net Present Value (NPV).
2. Internal Rate of Return (IRR).
3. Discounted Payback Period.
4. Average Accounting Return (AAR) assuming the project’s annual accounting profit is $80,000.
5. Profitability Index (PI).