Question 3

A software firm is evaluating a project that needs an initial investment of $120,000. The expected net cash flows for the project are shown below. Assume the company's cost of capital is 9%. Calculate and comment on the project's NPV, IRR, and discounted payback period.

Year	Cash Flows	Discount Factor (9%)
1	$30,000	0.917
2	$35,000	0.842
3	$40,000	0.772
4	$45,000	0.708
5	$40,000	0.650
Salvage Value	$10,000	0.650

Requirements:

1. Calculate the Net Present Value (NPV).
2. Determine the Internal Rate of Return (IRR).
3. Compute the discounted payback period.
4. Provide a brief commentary on the investment decision based on NPV and IRR.