An organization wants to embark on a project out of which they expect some returns in a years$$ time. The organization therefore wishes to finance the project through debt. They have approached a bank which has agreed to advance a loan to finance the project. The bank wishes to use the cash flows from the project as collateral. The organization has therefore prepared a project proposal specifying the proposed cash flows from the project for a period of five years. The initial requirement for the project is GHC$500,000.$

YEAR $012345$

Cashflow GHC$000(500)100120250350550$

The bank is convinced with the proposal and has agreed to give the said amount at an interest of $10\%$ per annum subject to an expert advice. The bank has therefore hired you as a project financial consultant to advice the management of the bank on the financial viability or otherwise of the project. Your findings will help the bank take a decision in the loan advance. Your presentation must be centered on the following financial appraisal techniques stating your reasons in each case

i$.$ Simple payback method

ii$.$ Net present value

iii. Profitability Index $($PI$)$

iv$.$ Internal Rate of Return $($IRR