Question 9

An organization is assessing a capital investment with the following financial projections:

Annual Cash Flows:

• Year 0: -$250,000
• Year 1: $70,000
• Year 2: $80,000
• Year 3: $90,000
• Year 4: $100,000

Requirements:

1. Calculate the cumulative cash flow for each year.
2. Determine the payback period.
3. Compute the Net Present Value (NPV) at an 11% discount rate.
4. Calculate the Internal Rate of Return (IRR).
5. Evaluate the investment using the payback period, NPV, and IRR.