Rogue River, Inc. is considering a project that has an initial after-tax outlay or after-tax cost of $220,000. The respective future cash inflows from its four-year project for years 1 through 4 are $80,000, $60,000, $70,000, and $50,000. Rogue River has a discount rate of 8%.

Appraise the project by using the following methods:

a) Payback period model (5 marks)

b) Net Present Value (NPV) state the formulas for the discounting factor and Present value of NCF(10 marks)

d) Profitability Index (PI) (4 marks)

e) Explain two significant weaknesses of payback period model (2 marks)

f) Advise Rogue River what to do based on your findings (5 marks)