111. Conflict between discounted cash flow (DCF) analysis and accrual accounting A capital investment project was approved based on a well-done DCF analysis. After the initial investment, the expected cash flows of the project were negative for the first two years, small but positive for the next two years and then very large for the last four years. The cash flows were in the form of saving of costs, not additional revenues. The manager of the department in which this project will be implemented is evaluated in terms of the department as a profit centre, with a heavy emphasis on the changes in profit compared to the previous year. i. If the project has negative cash inflows for the first two years followed by small positive inflows for the next two years, how could a DCF analysis lead to accepting the project? ii. Explain how there may be a conflict between the results suggested by the DCF model and the performance evaluation of the manager