A four-year project requires an initial investment of $208,000 for fixed assets and $19,500 for net working capital. All of the net working capital will be recouped at the end of the project. The annual operating cash flow is $76,200 and the discount rate is 6.00 percent.

I. Create a timeline/chart to identify the relevant Cash Flows and their timing

II. Use the Cash Flows for the following analysis:


a) What is the Payback Period? b) What is the NPV? c) What is the IRR? d) What is the Profitability Index? e) Should the company do this project? Why or Why not?

Answer rating: 100% (QA)

I Project Cash Flow Timeline Year Cash Flow Description 0 227500 Initial Investment Fixed Assets Net Working Capital 1 76200 Annual Operating Cash Flo... View the full answer