Goldman Sachs Group is considering a project with an initial investment of $550,000 The asset will be depreciated over five years at 20 per year The expected cash flows are Year Inflow ($) Outflow ($) Year 1 160,000 65,000 Year 2 170,000 70,000 Year 3 180,000 75,000 Year 4 190,000 80,000 Year 5 200,000 85,000 a What is the payback period b Calculate the internal rate of return (IRR) c Assuming a cost of capital of 10 , what is the net present value (NPV) of the cash flows d Should Goldman Sachs proceed with the project

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Question: Goldman Sachs Group is considering a project with an initial investment of $550,000. The asset will be depreciated over five years at 20% per year.

Goldman Sachs Group is considering a project with an initial investment of $550,000. The asset will be depreciated over five years at 20% per year. The expected cash flows are:

Year	Inflow ($)	Outflow ($)
Year 1	160,000	65,000
Year 2	170,000	70,000
Year 3	180,000	75,000
Year 4	190,000	80,000
Year 5	200,000	85,000

a. What is the payback period?
b. Calculate the internal rate of return (IRR).
c. Assuming a cost of capital of 10%, what is the net present value (NPV) of the cash flows?
d. Should Goldman Sachs proceed with the project?

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