DP Architects International, a firm that specializes in artistic architecture on large infrastructures is evaluating the feasibility
Question:
DP Architects International, a firm that specializes in artistic architecture on large infrastructures is evaluating the feasibility of a project that will entail an investment of $1,500,000. You, as one of its junior project managers, have been assigned to manage the proposed project. It is projected to generate a cash inflow of $350,000 at the end of its first year from the project start, $380,000 at the end of the second year, and $450,000 at the end of the succeeding three years.
With the company’s estimated discounted payback period for this type of project at 3.5 years, determine if it is worth accepting at the discount rate of 10%. Show to the management your workings (complete calculations) and convince them why the project should be accepted or rejected. Discuss your answers.
Advanced Accounting
ISBN: 978-0538480284
11th edition
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng