Monson company is considering two investment opportunities with cash flows as described below:

Project B: Initial cash investment now $($Time$0)$ $$35,000$

Annual cash outflow per year for $5$ years $$4,000$

Cash inflow at the end of the $5$th year $$60,000$

The present value at time $0$ is $1\mathrm{.}000$

The present value of $$1$ using a discount factor of $16\%$

year $1$ year $2$ year $3$ year $4$ year $5$ year $6$ year $7$ year $8$

$0\mathrm{.}8620\mathrm{.}7430\mathrm{.}6410\mathrm{.}5520\mathrm{.}4760\mathrm{.}410\mathrm{.}3540\mathrm{.}305$

The factor for the present value of an annuity of $$1$ discount factor of $16\%$

year$1$ year$2$ year$3$ year$4$ year$5$ year$6$ year$7$ year$8$

$0\mathrm{.}8621\mathrm{.}6052\mathrm{.}2462\mathrm{.}7983\mathrm{.}2743\mathrm{.}6854\mathrm{.}0394\mathrm{.}344$

$1.$ Compute the net present value of the project assuming monson company uses a $16\%$ discount rate. $9$ marks

type of cashflow Item years cashflow $16\%$factor present value of cashflows

net present value

$2.$ Should monsoon invest in the project? $2$ marks

decision

reason