Your written analysis should be double spaced, one page minimum, three page maximum in

length.

The issues to address in your analysis are the following:

$1)$ Please explain the cost of capital as a variable in your analysis?

$2)$ Would you recommend this project and why? If you do not recommend, why not?

What were the key factors in your recommendation?

$3)$ Going forward, what adjustments would you recommend to make this project

produce greater return?

referance: The annual cash flows are calculated based on the information given. The selling price per unit and variable costs per unit are adjusted for a $4\%$ annual inflation rate. Fixed costs also increase by $4\%$ after year $1.$ Operating cash flow is calculated by adding depreciation to net income. In year $5,$ the salvage value is also added to the operating cash flow. A profitability index of $1\mathrm{.}21$ indicates that for every dollar invested in the project, the company can expect to receive $$1\mathrm{.}21$ in return, in present value terms. This suggests that the project is expected to generate a return that exceeds the initial investment and is therefore a good investment.