Consider the following cash flow series over the twenty-year period of a project. The salvage of the project at the end of its life is negligible.

End of year0123 ................... 20

Cash Flows ($):5,000,0001,000,000

1,000,000

1,000,000 ..........1,000,000

Assuming the interest rate at 18%, compounded annually:

(a) Calculate the net present value of the project (present worth of 18% for 20 years of 5.3527).

b) Determine whether or not to proceed with the project. Give the reason(s) for your advice.