Consider the following cash flows:

Year 0 1 2 3 4 5 6

Cash Flow -$8,000 $3,000 $3,600 $2,700 $2,500 $2,100 $1,600

1. Payback. The company requires all projects to payback within 3 years. Calculate the payback period. Should it be accepted or rejected?

= 2+ ((8000 6600) / 2700)

= 2+ (1400 / 2700)

= 2.52 years

The project should be accepted since the payback period is lower than the cut off period of 3 years.

2. Discounted Payback. Calculate the discounted payback using a discount rate of 10%. Should it be accepted or rejected?

= 3 + ((8000 7731.03) / 1707.53)

= 3 + (268.97/ 1707.53)

= 3.16 years

The project should be rejected since the cut off for the payback period is 3 years and the payments will not suffice.

3. IRR. Calculate the IRR for this project. The companys required rate of return is 10%. Should it be accepted or rejected?

= 26.31%

The project should be accepted since the IRR is greater than the discount rate of 10%.

4. NPV. Using a 10% required rate of return, calculate the NPV for this project. Should it be accepted or rejected?

5. PI. Calculate the Profitability Index (PI) for this project. Should it be accepted or rejected?

I need help with the D and E