Question: ABC Corp is considering whether to extend its product line to include a new product that has a forecasted life of five years. Total investments

ABC Corp is considering whether to extend its product line to include a new product that has a forecasted life of five years. Total investments costs at Time 0 would be $150,000. The company forecasts that for the following five years, total cash flows would be $50,000, $60,000, $70,000, $110,000, and $30,000, respectively. For this type of a project, ABC requires a minimum $14.00% compound annual return on invesment.

Calculate the payback period and profitability index for this investmenT

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