Problems 1 to 7 A proposed project requiring an initial outlay of $340,000 will provide the following year-end cash flows (remember that the initial outlay and year 3 are negative cash flows)

Year 1 2 3 4 5 6

Cash flows $140,000 $211,000 -$440,000 $195,000 $321,000 $315,000

1. Using a 6% required return, please compute the net present value______________. Is the investment desirable?

2. Using a 6% required return, please compute the profitability index for the above investment__________________.

3. Using a 6% required return, please compute the modified profitability index for the above investment__________________.

4. Please compute the internal rate of return for the above investment __________________.

5. Using a 6% required return, please compute the modified internal rate of return for the above investment (using the method described in the text