A) Calculate Net Present Value and Profitability Index using straight-line depreciation;

B) Net Present Value and Profitability Index using double declining depreciation.

Investment cost is 400,000

Gross cash inflows for 5 years are: Year 1: 80,000 Year 2: 170,000 Year 3: 115,000 Year 4:

95,000 Year 5: 90,000

The cost of money is 12%

The salvage value of the investment is 40,000 and is not included in the above cash inflows

Estimated Tax rate for all years is 25%

Using straight-line depreciation

Cash inflows occur at end of each year.