Project Payback, NPC, IRR & Profitability Index
Gregor plans to open a pen store in a store front mall. His initial equipment cost is $50,000. At the end of each year, he receives after tax cash flows of $13,000 annually for 5 years, after which he plans sto scrap the equipment and retire to the beaches of Jamaica. His opportunity costof capital is 9.0%
- What is the project's payback period? If he wants to be paid back within 5 years, should he accept the project.
- What is the project's NPV? Should he accept the project
- What is the project's IRR? Should he accept the project
- What is the project's profitabillity Index
