Capital Budgeting

IBL Project IBL is a company which is growing very fast and is undertaking many projects. Below is the financial information concerning a project which the management accounting department has to study and make a decision whether to accept or to reject. Capex Project period Revenue Supplies expense Salary Expense Utilities Expense Discount Rate Sale of asset @ end of project Net working Capital $27000 6 years $9,500 800 3500 1,200 9% $ 6,000 $4,500 The company's tax rate is 30%. The project also earned $1,500 as rent revenue. The capital expenditure is depreciated using straight line method over the project and will have a residual value of $6000. the company will have to pay $650 for maintenance cost. REQUIRED 10 11 12 13 14 15 16 17 Sale of asset @ end of project Net working Capital $ 6,000 $4,500 The company's tax rate is 30%. The project also earned $1,500 as rent revenue. The capital expenditure is depreciated using straight line method over the project and will have a residual value of $6000. the company will have to pay $650 for maintenance cost. REQUIRED a) Calculate the initial investment b) Calculate each year cash flow c) Calculate the terminal value of the asset used d) Calculate the NPV e) Calculate the Profitability Index (Pl]