When I ask if you would proceed with a project based on an investment criteria, you MUST state the reason you would accept/reject the project BASED ON THAT RULE, even if you would reject/accept the project for other reasons. 7. Initial investment = ($800,000) Cash flow in year 1 - $250,000 Cash flow in year 2 = $365,000 Cash flow in year 3 - $555,000 The discount rate = 15% Calculate the net present value. 8. Initial investment ($800,000) Cash flow in year 1 - $250,000 Cash flow in year 2 = $365,000 Cash flow in year 3 = $555,000 The discount rate = 15% Calculate the profitability index. 9. The internal rate of return for the cash flows in Question 8 is 18.80% Solely based on the TRR rule, indicate if you would accept this project and why or why not 10. State which investment criteria does/do not account for the time value of money: Net present value Profitability index Payback period Internal rate of return 11. [1 extra credit point] From Question 7, based solely on the net present value rule, indicate if you would accept this investment and why or why not