Question

Perform a financial analysis for a project where you will show costs, discount factor for cost, and discounted costs as well as benefit, discount factor for benefit and discounted benefit for each year starting from year 0. Assume the projected cost and benefits for this project are spread over four years as follows: Estimated costs are $145,000 in year 0 and $45,000 each year in years 1, 2, and 3, and estimated benefits are $0 in year 0 and $210,000 each year in years 1, 2, and 3. Use a discount rate of 6.5% (six and half percent) and round the discount factors to two places after decimal. Calculate the NPV and the ROI. Show all computed and given values in tabular form. Which year does the payback occur? How did you arrive at that conclusion? List all necessary assumptions.

Answer 1