Question 5

A retail business is evaluating the viability of a project that requires an initial investment of $180,000. The projected annual net cash flows are listed below. Assume the company's cost of capital is 7%. Calculate and comment on the project's NPV, IRR, and discounted payback period.

Year	Cash Flows	Discount Factor (7%)
1	$45,000	0.935
2	$50,000	0.873
3	$55,000	0.816
4	$60,000	0.763
5	$65,000	0.713
Salvage Value	$25,000	0.713

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 project based on NPV and IRR.