Question: Class, explain what this project shows. Explain it as if you were the CFO and you were explaining it to the CEO. The CEO is

Class, explain what this project shows. Explain it as if you were the CFO and you were explaining it to the CEO. The CEO is the son of the company's founder and has an undergraduate degree in philosophy from Brown University.

$15 million capital expenditure will result in a cash savings for the next six years

Time Projected cash flow

0 15,000,000

1 7,000,000

2 7,000,000

3 7,000,000

4 7,000,000

5 7,000,000

6 7,000,000

Discount Rate (the companys incremental cost of capital) 11%

Net Present Value (NPV) of future cash flow 29,613,765

Less initial cash flow 15, 000, 000

Net present value 14,613, 765

Internal rate of return (IRR) 40.635%

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