Question: Question 5 (20 marks) A potential five-year project has a projected net cash flow of $15,000 in each of Years 1 and 2 and $12,000

Question 5 (20 marks)

A potential five-year project has a projected net cash flow of $15,000 in each of Years 1 and 2 and $12,000 in Years 3-5.

The cost of the project, incurred in Year 0, is $50,000. The companys required rate of return is 10%.

[Answer here]

Year

Amount ($)

Discounter

NPV

0

-50,000

1

15,000

2

15,000

3

12,000

4

12,000

5

12,000

Total

a) Fill in the columns headed Discounter and NPV in the table above. (10 marks)

b) Advise the company as to whether or not to proceed with the project. Give reasons for your answer. (10 marks)

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