For each question,

show your work/calculations.

Problem 1

You are considering a project (acquisition of an ice cream cart) with an initial cost of $6,000. What is the payback period for this project if the cash inflows are $3,600, $3,600 and $3,600 over the next three years, respectively?

Problem 2

The project's initial cost is $10,400. This project will produce the following cash: $3,100 in year 1, $3,100 in year 2, $3,100 in year 3 and $4,400 in year 4. What is the net present value if the required rate of return is 16 percent?

Problem 3

A project has a discount rate of 14 percent, an initial cost of $99,200, an inflow of $56,400 in year 1 and an inflow of $75,900 in year 2. Based on this information, what is the profitability index (PI) on this project?

Problem 4

An investment project has annual cash inflows of $2800, $3700, $5100, and $4300, and a discount rate of 14 %. What is the discounted payback period for these cash flows if the initial cost is $5,200?