Case study 1: Gray Matrix Company has to decide on investment of AED 550,000 in new project for the fast production. Assist company in making the effective decision. The followings are net income (NI) and data: Year 1 NI 35,000 5,500 Year 2 NI Year 3 NI 22,100 Target payback period 2 years Company's required return for assets of this risk is 16%. According to the management, the project will provide a net cash inflow of $400,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 10 percent per year till 3 years. Required: 1. Calculate Payback period and evaluate that company should accept or reject the project and why? Cash Flow Cumulative Cash Flow Year Calculate Average Accounting return and evaluate that company should accept or reject the project and why? 1. Calculate Net present value and evaluate that company should accept or reject the project and why? 2 Cash Flow PV factor Present value Year 3 T Case study 1: Gray Matrix Company has to decide on investment of AED 550,000 in new project for the fast production. Assist company in making the effective decision. The followings are net income (NI) and data: Year 1 NI 35,000 5,500 Year 2 NI Year 3 NI 22,100 Target payback period 2 years Company's required return for assets of this risk is 16%. According to the management, the project will provide a net cash inflow of $400,000 for the firm during the first year, and the cash flows are projected to grow at a rate of 10 percent per year till 3 years. Required: 1. Calculate Payback period and evaluate that company should accept or reject the project and why? Cash Flow Cumulative Cash Flow Year Calculate Average Accounting return and evaluate that company should accept or reject the project and why? 1. Calculate Net present value and evaluate that company should accept or reject the project and why? 2 Cash Flow PV factor Present value Year 3 T