Question 5

A business is considering an expansion project with the following projected cash flows:

Yearly Cash Flows:

• Year 0: -$150,000
• Year 1: $40,000
• Year 2: $50,000
• Year 3: $60,000
• Year 4: $70,000
• Year 5: $80,000

Requirements:

1. Calculate the project's payback period.
2. Determine the NPV of the project at a 9% discount rate.
3. Compute the Profitability Index (PI).
4. Calculate the IRR.
5. Evaluate the project using NPV, PI, and IRR criteria.