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A project has an initial cost of $6,000 and has annual cash inflows of $1,725, $2,165,...

A project has an initial cost of $6,000 and has annual cash inflows of $1,725, $2,165, $2,281, and $2,624 in years 1-4. Assuming a 15% discount rate, find the following for the project.
1.NPV
2.IRR
3.Profitability index
Should we accept the project based on each of these rules?

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Answer #1

Since NPV is postive we should accept it

IRR is higher than discount rate so we should accept

The PI is higher than 1 so we should accept it

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