Project Valuation The financial manager of Solsken is evaluating a proposal to purchase a new solar machine unit that has a lifetime of 10 years. The new machine would allow the company to make cost savings of SKr4 million per annum. The new fully solar machine would cost SKr9 million and have a resale value of SKr1 million at the end of the project. The required rate of return on such investments is 14 per cent.

However, the firm can only reinvest future cash flows from the project at the company discount rate of 12 per cent. Use four methods to appraise the value of this investment.