Capital Budgeting Tools Consider the following cash flows:

(a) What is the payback period for the above project? Assume the cash flows are received continuously throughout each year.

(b) If the discount rate is 10 per cent, what is the NPV of the project?

(c) If the discount rate is 10 per cent, what is the IRR of the project? How many IRRs does the project have? Explain how you would deal with this problem.

(d) If the discount rate is 10 per cent, what is the PI of the project?

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Year Cash flow 0 -15,000 1 4,000 2 5,000 3 -2,000 4 7,000 5 7,000