The management believes we can validate and choose projects based on expected returns developed from the WACC and that it will help reduce risk of our investors capital thus lowering the required rate of return we would have to provide to those investors. If we lower our expected return we can then do more projects and grow at a faster rate. Justify this statement with example

Break-even on simple cash basis

Annual cost	$100,000
Tax rate ($100,000 * 40%)	- $40,000
Net Savings	$60,000
Depreciation (40%*$1,000,000/30 years)	$13,333
Cash Inflow from the project	$73,333
Break even on simple cash basis (in years)	13.64

Calculations are based from the cash inflows from the project divided by the initial investment of $1,000,000. Cash inflows from the project are also adjusted to take into consideration the inflation rate of the project which is 2.7 percent. Furthermore, using the break-even analysis method of cost, I determines that this project will not break-even based on the total present value for 30 years with present value totals of $549,750 which is not equivalent to initial investment cost of $1,000,000.