What other considerations do you feel are relevant in assessing the results of NPV and IRR? In other words, what might have caused the negative NPV and small IRR?

Please refer to cash flows

File Home Insert Draw Page Layout Formulas Data Review View Automate Help Editing v 1 v [ v Calibri 12 B Mv Av . . . Ev ab General 00 00 V K21 X V fx A B C D E F G H I J K M N P Q R S T 1 NPV Assignment Version #4 Scenario: Lancers, Ltd. is contemplating a $350,000 investment of equipment that they feel can add $90,000 in W N Investment Information: revenues in Year #1 and Year #2, and $100,000 in revenue in Year 3, and $105,000 in Years 4 & 5. They Initial Investment= $350,000 Discount Rate 8.0% estimate variable expenses at 7.5% of Sales and additional fixed costs would be approximately $9,500 per Opportunity cost (if any)= NA Cost of Borrowing 7.5% year. The equipment should last 5 years and have a salvage value of $15,000 at the end of its life. They've Lifetime of the investment 5 Cost of Equity 15.0% decided to use straight line depreciation over the equipment life. Salvage Value at end of project= $15,000 Debt to Equity NA 11 12 Year # 13 0 1 2 3 4 5 14 15 Investment (350,000) $ 15,000 16 17 Incremental Revenue $ 90,000 $ 90,000 $ 100,000 $ 105,000 $ 105,000 18 Variable expenses (6,750) (6,750) (7,500) (7,875) (7,875) 19 Fixed Expenses (9,500) (9,500) (9,500) (9,500) (9,500) 20 EBITDA (350,000) 73, 750 73,750 83,000 87,625 102,625 21 Deductible Depr. Exp (70,000) (70,000) (70,000) (70,000) (70,000) 22 EBIT (350,000) 3,750 3,750 13,000 17,625 32,625 23 Tax rate 40% 40% 40% 40% 40% 24 Taxes (1,500) (1,500) (5,200) (7,050) (13,050) 25 Net Cash Flows $ (350,000) $ 72,250 $ 72,250 $ 77,800 $ 80,575 $ 89,575 26 27 PV of Cash Flows $ (350,000) $ 66,898 $ 61,943 $ 61,760 $ 59,225 $ 60,963 28 Cumulative PV of NCF (350,000) $ (283,102) $ (221,159) $ (159,399) $ (100,174) $ (39,211) 29 Investment Measures: 30 NPV (39,211) 31 IRR 3.8% 33 34 Sheet1 +