Question: In reviewing current operating processes, the company accountant has provided you with the following information (below and Table 1) about a small chemical process that

In reviewing current operating processes, the company accountant has provided you with the following information (below and Table 1) about a small chemical process that was built ten years ago.

Capital investment = $30 x 106 ($10 x 106 at end of year 1, $15 x 106 at end of year 2, and $5 x 106 at end of year 3)

Working capital = $10 x 106

Table 1. Cash Flow Information

Year after Start-up

Yearly After-tax Cash Flow ($106/yr)

1

7.015

2

6.206

3

6.295

4

6.852

5

6.859

6

7.218

7

5.954

8

5.459

9

5.789

10

5.898

Provide a summary table of values, and the cumulative cash flow diagrams for the non-discounted and discounted cases.

Calculate the following:

Non-discounted payback period (PBP)

Rate of return on investment (ROROI)

Discounted payback period (DPBP) – use a discount rate of 7%

Net present value (NPV) – use a discount rate of 7%

Discounted cash flow rate of return (DCFROR)

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