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A company is considering an investment project with the following cash flows: Initial investment at...

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Accounting

A company is considering an investment project with the following cash flows: Initial investment at Year 0 of $7,000,000, cash inflows of $3,000,000 in Year 1, $4,000,000 in Year 2, and $2,500,000 in Year 3. The cost of capital is 14%.

  1. Calculate the Net Present Value (NPV) of the project.
  2. Determine the Internal Rate of Return (IRR) for the project.
  3. If the company's required rate of return is 14%, should the project be accepted based on the NPV rule?
  4. Calculate the Profitability Index (PI) for the project.
  5. Compute the payback period.

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