Question: A retail chain is considering a new store that requires an investment of $1,000,000 and has projected the following cash flows: Year 1: $300,000 Year

A retail chain is considering a new store that requires an investment of $1,000,000 and has projected the following cash flows:

  • Year 1: $300,000
  • Year 2: $350,000
  • Year 3: $400,000
  • Year 4: $450,000

Requirements:

  1. Calculate the payback period.
  2. Calculate the NPV using a 9% discount rate.
  3. Calculate the IRR.
  4. Evaluate the project using NPV and IRR criteria.
  5. Calculate the Profitability Index.

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