Comparing all

methods.

Risky Business is looking at a project with the following estimated cash flow:

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. Risky Business wants to know the payback period, NPV, IRR, MIRR, and PI of this project. The appropriate discount rate for the project is

10%.

If the cutoff period is

6

years for major projects, determine whether the management at Risky Business will accept or reject the project under the five different decision models.

What is the payback period for the new project at Risky Business?

Initial investment at start of project:

$12,000,000

Cash flow at end of year one:

$2,040,000

Cash flow at end of years two through six:

$2,400,000

each year

Cash flow at end of years seven through nine:

$2,448,000

each year

Cash flow at end of year ten:

$