Sanofi is evaluating a project that involves an initial investment of $650,000 The asset is depreciated over five years at 20 per year The projected cash flows are as follows Year Inflow ($) Outflow ($) Year 1 210,000 90,000 Year 2 220,000 95,000 Year 3 230,000 100,000 Year 4 240,000 105,000 Year 5 250,000 110,000 a What is the payback period b Calculate the internal rate of return (IRR) c Assuming a cost of capital of 9 , what is the net present value (NPV) of the cash flows d Should Sanofi accept the project

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Question: Sanofi is evaluating a project that involves an initial investment of $650,000. The asset is depreciated over five years at 20% per year. The projected

Sanofi is evaluating a project that involves an initial investment of $650,000. The asset is depreciated over five years at 20% per year. The projected cash flows are as follows:

Year	Inflow ($)	Outflow ($)
Year 1	210,000	90,000
Year 2	220,000	95,000
Year 3	230,000	100,000
Year 4	240,000	105,000
Year 5	250,000	110,000

a. What is the payback period?
b. Calculate the internal rate of return (IRR).
c. Assuming a cost of capital of 9%, what is the net present value (NPV) of the cash flows?
d. Should Sanofi accept the project?

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