CORPORATE FINANCE INC. has a possible capital budgeting project with a cost of capital of 10%, and the expected cash flows shown below. 

Year	0	1	2	3	4	5
Cash Flow	-100	25	50	50	25	10

1. Calculate the project’s NPV. Should CORPORATE FINANCE INC. accept the project? Why? (4 points)
2. Calculate the project’s IRR (approximate the IRR). Should CORPORATE FINANCE INC. accept the project according to the IRR rule? Why? (4 points)
3. Calculate the project’s Profitability Index. Should CORPORATE FINANCE INC. accept the project according to the Profitability Index rule? (4 points)
4. Calculate the project’s discounted payback period. What does payback tell you about the project’s acceptability? (4 points)

Answer rating: 100% (QA)

To calculate the projects NPV we need to discount the cash flows at the cost of capital 10 and sum t... View the full answer