Question

Risky Business is looking at a project with the estimated cash flow as​ follows:

Initial investment at start of​ project:$12,200,000

Cash flow at end of year​ one: $2,196,000

Cash flow at end of years two through​ six:$2,440,000 each year

Cash flow at end of years seven through​ nine:$2,635,200 each year

Cash flow at end of year​ ten: $2,027,077

Risky Business wants to know the payback​ period, NPV,​ IRR, and PI of this project. The appropriate discount rate for the project is 13​%. If the cutoff period is six years for major​ projects, determine whether the management at Risky Business will accept or reject the project under the five different decision models.

What is the payback period for the new project at Risky​ Business?

____years  ​(Round to two decimal​ places.)

Under the payback​ period, this project would be Accepted or rejected?

What is the NPV for the project at Risky​ Business?

​$____(Round to the nearest​ cent.)

Under the NPV​ rule, this project would be Accepted or rejected?

What is the IRR for the new project at Risky​ Business?

____% (Round to two decimal​ places.)

Under the IRR​ rule, this project would be Accepted or rejected?

What is the PI for the new project at Risky​ Business?

______ ​(Round to two decimal​ places.)

Under the PI​ rule, this project would be Accepted or rejected?

Answer 1