Monicka Ltd wants to go online and decides to appraise investment opportunities. It has opportunities for investing in a project. The Project has an initial cost of 400,000. The estimated net cash flows over the next six years will correspond to those given below

Cash inflow

year 1- 100,000

year 2- 110,000

year 3- 120,000

year 4- 110,000

year 5- 105,000

year 6- 100,000

a) You are required to calculate for project 1 the following:

i) The payback period;

ii) The net present value at 10% cost of capital, and

iii) The internal rate of return

b) Advise Monicka ltd on the suitability of the project, based on your above calculations.