Question

1. What is the payback period for the following set of cash flows?

Year	Cash Flow
0	−$ 7,200
1	2,700
2	1,400
3	1,700
4	2,600

2. An investment project has annual cash inflows of $6,000, $7,100, $7,900, and $9,200, and a discount rate of 16 percent.

Required:

What is the discounted payback period for these cash flows if the initial cost is $9,500?

3. What is the IRR of the following set of cash flows?

Year	Cash Flow
0	–$10,960
1	5,700
2	5,700
3	4,900

4. What is the internal rate of return on an investment with the following cash flows?

Year	Cash Flow
0	–$118,000
1	44,900
2	32,500
3	48,750

5. What is the profitability index for an investment with the following cash flows given a 6 percent required return?

Year	Cash Flow
0	–$21,000
1	7,700
2	10,000
3	9,400