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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