D " Monson Company is considering the following investment opportunity with cash flows as described below 0 TH 1 Project A 4 Initial cash investment now (Time 0) Cash inflow at the end of the 4th year Cash inflow at the end of the 8th year $40,000 $42.000 $60,000 The Present Value at Time 0 is 1.000 8 9 The Present Value of $1 using a discount factor of 14% 20 Year 1 0.877 Year 2 0.769 Year 3 0.675 Year 4 0.592 Year 5 Year 6 Year 7 Year 8 0.519 0.456 0400 0351 32 13 The factor for the Present Value of an Annuity of $1 discount factor of 14% 14 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 15 0.877 1.647 2.322 2.914 3433 3.889 4.228 4.639 16 Required: 17 1. Compute the net present value of the project assuming Monson Company uses a 14% discount rate. (9 marks) 18 19 Project A: 20 21 Type of 14% Cashflow Item 22 Inflow 23 Outflow Cash inflow at the end of the 8th year Initial cash investment Years Cashflow factor Year 8 Year 0 Present Value of Cashflows $500000001 $4 -$100000001 $1 24 25 Net present value $3 6 72. Should Monsoon invest in the project? (2 marks) S Decision: Reason: Yes Because the net present value is positive