Prepare the Cash Flow Statement and estimate –

1. compute the average profit rate for the Project life
2. Internal Rate of Return for the Project.
3. Payback Period
4. Profit & Loss Statement
5. Net Present Value (NPV) at 10% discount rate

Sales: Year 1 Nil

Year 2 $ 60,000

Year 3 -5 $ 70,000

Costs:

Fixed cost Year 1-5 $ 7,000

Variable cost 20% of sales

Investment $ 25,000

Terminal Value of Investment $ 10,000

Depreciation 10% of initial investment

Answer rating: 100% (QA)

1 Cash flow statement Year 1 Year 2 Year 3 Year 4 Year 5 Sales 60000 70000 70000 70000 Less Fixed Co... View the full answer