A project has an initial cost of investment of Ksh. 10,000 in a machine and the following expected cash inflows:
Year 1 Ksh.6,000
Year 2 Ksh.6,000
Year 3 Ksh.6,000
Year 4 Ksh.5,000
Year 5 Ksh.5,000
No scrap value is expected from the machine. The cost of capital is expected to be 10% throughout the five years of the project.
Required: Evaluate the suitability of the project using

i. Return on investment method.

ii. Discounted cash flow (NPV) method.

b) Find the equation of the line that passes through the point (18, 6) and (14, 54).

Answer rating: 100% (QA)

The detailed answer for the above question is provided below Solution i Return on Investment Method Return on Investment ROI Net Profit Cost of Invest... View the full answer