Perform a financial analysis for a project using the format provided in Figure 4-5. Assume that the projected costs and benefits for this project are spread over four years as follows: Estimated costs are $300,000 in Year 1 and $40,000 each year in Years 2, 3, and 4. Estimated benefits are $0 in Year 1 and $120,000 each year in Years 2, 3, and 4. Use a 7 percent discount rate, and round the discount factors to two decimal places. Create a spreadsheet or use the business case financials template on the Companion website to calculate and clearly display the NPV, ROI, and year in which payback occurs. In addition, write a paragraph explaining whether you would recommend investing in this project, based on your financial analysis.

Data from in Figure 4-5

Discount rate 8% Assume the project is completed in Year 0 0 Costs Discount factor Discounted costs Benefits Discount factor Discounted benefits Discounted benefits - costs Cumulative benefits - costs ROI 1 140,000 40,000 1 0.93 140,000 37,200 Year 2 40,000 40,000 0.86 0.79 34,400 31,600 243,200 3 Total 0 200,000 200,000 200,000 1 0.93 0.86 0.79 0 186,000 172,000 158,000 516,000 (140,000) 148,800 137,600 126,400 272,800 NPV (140,000) 8,800 146,400 272,800 112% Payback in Year 1