Question

Question-4

You are evaluating a project for your company. The cost of the capital of your company is 15 percent. The initial cost of the project is $5,000,000. The project is expected to provide after-tax operating cash inflows of $1,800,000 in the first year, $1,900,000 in the second year, $1,700,000 in the third year, and $1,300,000 in the fourth year. Would you recommend this project for your company?

YOU MUST SHOW AND JUSTIFY YOUR WORK.

YOU MUST ALSO SHOW CALCULATOR ENTRIES WHEN APPLICABLE.

FINAL ANSWER

Project Recommendation (Yes or No)

A Yes Or No Answer Without Any Calculation And Justification Will Result In A Zero Grade

Answer 1

Calculation done into excel sheet n answer also into there,

Computation Of PV Of CIF
Years	Cash In flow	Pv factor @15%	$
1	$1,800,000	0.8696	1565217.39
2	$1,900,000	0.7561	1436672.97
3	$1,700,000	0.6575	1117777.60
4	$1,300,000	0.5718	743279.22
Total			4862947.17
Pv Of Project*			5000000.00
N.P.V.			-137052.83
Recommendation : Reject the project in view of negative NPV.
Note : *Initial cost of project taken
My opinion : Not to accept,
I could not recommend this projec due to negative NPV.