Use the following information for the next four questions. Norlin Corporation is considering an expansion project that will begin next year (Time 0). Norlin's cost of capital is 12%. The initial cost of the project will be $250,000, and it is expected to generate the following cash flows over its five-year life:

Year $
1 $40,000
2 $60,000
3 $90,000
4 $90,000
5 $90,000

1. What is the payback period for the expansion project?
a. 3.67 years
b. 4.00 years
c. 4.25 years
d. 4.67 years
e. 5.00 years

2. What is the net present value (NPV) of for the expansion project?
a. ($45,197)
b. $ 5,871
c. $ 13,784
d. $ 25,726
e. $120,000

3. What is the internal rate of return (IRR) for the expansion project?
a. 4.13%
b. 6.50%
c. 10.36%
d. 12.83%
e. 14.67%

4. What is the Profitability Index (PI) for the expansion project?
a. 1.02
b. 1.05
c. 1.10
d. 1.48
e. Cannot be determined