A new fishing project requires initial investment of $30,000 to purchase fishing boat and additional $2,000 to fix it up ready for sailing. The boat falls in 3-year class MACRS depreciation.The MACRS depreciation rates are 33%, 45%, 15% and 7% over years 1 - 4 respectively. The boat has economic life of five years.At the end of the five years, the boat can be sold for $3,000.Inventory of supplies needed requires $5,000 at the start.

The project is expected to generate revenue of $20,000 during the first year and revenue grows at 10% rate every year until year 5.Operating costs amount to 50% of revenue.The marginal tax rate on this project is 20% and the appropriate discount rate is 12%. Prepare the yearly cash flow projections for this project and determine if it is worth undertaking.Also determine its payback period.