Payback Compute the payback statistic for Project with the following cash flows:

Time

0 -$150,000

1 $6,000

2 $60,000

3 $70,000

4 $100,000

Deciding whether the firm should accept or reject the project with the cash flows shown above if the appropriate cost of capital is 8 percent and the maximum allowable payback is three years.

Compute NPV of the above project assuming cost of capital of 10 percent.

IRR Compute the IRR statistic for project in problem 1, and note whether the firm should accept or reject the project with the cash flows shown above if the appropriate cost of capital is 10 percent.

PI Compute the PI (profitability index) statistic for Project in problem 1 and advise the firm whether to accept or reject the project if the appropriate cost of capital is 10 percent.