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Scenario: A company has the following projected cash inflows and outflows for a new project: Year Cash Inflows Cash Outflows 0 $0 $5,000 1 $1,500
Scenario: A company has the following projected cash inflows and outflows for a new project:
Year | Cash Inflows | Cash Outflows |
0 | $0 | $5,000 |
1 | $1,500 | $500 |
2 | $1,800 | $600 |
3 | $2,200 | $700 |
4 | $2,600 | $800 |
5 | $3,000 | $900 |
The required rate of return is 12%.
Requirements:
- Calculate the Net Present Value (NPV) of the project.
- Determine if the project should be accepted based on NPV.
- Compute the Internal Rate of Return (IRR).
- Calculate the Payback Period.
- Determine the Profitability Index (PI).
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