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Coca-Cola Company is considering a project that requires an initial investment of $600,000. The asset will be depreciated over five years at 20% per year.

Coca-Cola Company is considering a project that requires an initial investment of $600,000. The asset will be depreciated over five years at 20% per year. The expected cash flows are:

Year

Inflow ($)

Outflow ($)

Year 1

180,000

70,000

Year 2

190,000

75,000

Year 3

200,000

80,000

Year 4

210,000

85,000

Year 5

220,000

90,000

a. What is the payback period?
 b. Calculate the internal rate of return (IRR).
 c. Assuming a cost of capital of 11%, what is the net present value (NPV) of the cash flows?
 d. Should Coca-Cola Company proceed with the project?

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