Assignment

Your grandma has set up a fund of $1,000,000 for you. You have to invest this money in a fixed asset project. As a result of your feasibility study, you predict the following cash flow for the next 5 years:

Years Cash flows DF (10%)

1 250,000 0.909

2 280,000 0.826

3 300,000 0.751

4 300,000 0.683

5 300,000 0.621

Scrap value of the project is expected to be $400,000 assuming WACC is 10%;

a) Calculate the project's IRR and discounted payback period.

b) Briefly state the selected location, which sector you chose, and why.