Questions Set 66:

Solution

NPV, PI, and IRR calculations) Fijisawa Inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. The initial outlay would be $1,950,000, and the project would generate incremental free cash flows of $450,000 per year for 6 years. The appropriate required rate of return is 9 percent.
a.   Calculate the NPV.
b.   Calculate the PI.
c.   Calculate the IRR.
d.   Should this project be selected.

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