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Calculate the pay back period and net present value

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Reference no: EM132944724

A company is considering a project with information as follows:

Year 0 -100,000

Year 1 50,000

Year 2 40,000

Year 3 30,000

Year 4 20,000

Year 5 10,000

The project has a life span of 5 years. The company uses a 15% discount rate. The company has a policy for projects to have a cut-off period of 5 years.

Problem a. Calculate the pay back period.

Problem b. Calculate the net present value.

Problem c. Calculate the profitability index.

Problem d. Should the project be accepted? Explain.

Reference no: EM132944724

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