Question: GHI Enterprises is evaluating a potential project: Initial investment: $450,000 Expected annual benefits: Year 1: $90,000 Year 2: $95,000 Year 3: $100,000 Year 4: $105,000

GHI Enterprises is evaluating a potential project:
  • Initial investment: $450,000
  • Expected annual benefits:
    • Year 1: $90,000
    • Year 2: $95,000
    • Year 3: $100,000
    • Year 4: $105,000

Requirements:

  1. Calculate the NPV at a 7% discount rate.
  2. Determine the payback period.
  3. Compute the IRR.
  4. Evaluate the profitability index (PI).

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