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please answer only C and D It is necessary to evaluate profitability of proposed improvements to process prior to obtaining approval to implement changes. For
please answer only C and D
It is necessary to evaluate profitability of proposed improvements to process prior to obtaining approval to implement changes. For one such process, the capital investment (end of year 0) for the project is $250,000. There is no salvage value. In year 1 and 2, you expect to generate an after-tax revenue from the project of $60,000/yr. In years 3-8, you expect to generate an after tax revenue of $ 50,000/yr. Assume that the investments and cash flows are single transactions occurring at the end of the year. Assume an effective annual interest of 9%. a) Draw a discrete cash flow diagram for this project. b) Draw a cumulative, discounted (to year 0) cash flow diagram for this project c) What is the future value of this project at the end of year 8? d) Instead of investing in this project, the 250,000 could remain in the company's portfolio. What rate of return on the portfolio is needed to equal the future value of this project at the end of year 8? Would you invest in the project, or leave the money in the portfolioStep by Step Solution
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