Question 2

An electronics company is planning to launch a new product. The initial setup cost is $150,000. The projected annual net cash flows are as follows. The company's cost of capital is 12%. Calculate and comment on the project's NPV, IRR, and profitability index.

Year	Cash Flows	Discount Factor (12%)
1	$40,000	0.893
2	$50,000	0.797
3	$60,000	0.712
4	$50,000	0.636
5	$50,000	0.567
Salvage Value	$20,000	0.567

Requirements:

1. Calculate the Net Present Value (NPV).
2. Determine the Internal Rate of Return (IRR).
3. Compute the profitability index.
4. Analyze the feasibility of the project based on the calculated values.