please answer questions based on the results from first picture

Here we are trying to find out the answer based on the cost sheet given in the question itself CF4 CFI CF2 CF3 CFO In S Year Investments: (2,00,000) (i)Equipment cost (ii) Shipping and Installation Cost (iii) Startup Expenses (35,000) (5,000) Total basic cost (1+2+3) (iv) Net working Capital which we can find (2,40,000) 20,000 Total Initial Outlay 2,60,000 Operations : 2,00,000 2,10,000 2,20,500 2,31,525 (1,20,000) (1,26,000) (1,32,300) (1,38,915) (60,000) (60,000) (60,000) (60,000) 20,000 7,000 Revenue Operating cost Depreciation EBIT 24,000 8,400 32,610 28,200 9,870 Taxes 11,414 13,000 Next Income 15,600 21,197 18,330 Addback : Depreiciation 60,000 60,000 60,000 60,000 Total Operating Cashflow 73,000 75,600 78,330 81,197 1) Change in net WC 20,000 2) Salvage value (after tax) 15,000 35,000 Total Project Net Cash Flow NPV = Present value of net cash inflow - Total net initial investment $ 6,416 IRR = 11.2% Payback = Total initial investment / Annual expected after tax net cash inflow 3.28 year now from the above calculation Ans 1: Here NPV is positive so project should be acceptable, also here IRR> cost of canital 11. 2%>10% so project should be accentable 75,600 (2,60,000) 73,000 78,330 116,197 Would you accept the project based on NPV, IRR? Q#1 Would you accept the project based on Payback rule if project cut-off is 3 years? Impact of 2017 Tax Cut Act on Net Income, Cash Flows and Q#2 Capital Budgeting (Investment ) Decisions (a) Estimate NPV, IRR and Payback Period of the project if equipment is fully depreciated in first year and tax rate equals to 21%. Would you accept or reject the project? As a CFO of the firm, which of the above two scenario (a) or (b) would you choose? Why? (b) Q#3 How would you explain to your CEO what NPV means? Q#4 What are advantages and disadvantages of using only Payback method? Q#5 What are advantages and disadvantages of using NPv versus IRR? Q#6 Explain the difference between independent projects and mutually exclusive projects. When you are confronted with Mutually Exclusive Projects and have conflicts with NPV and IRR results, which criterion would you use (NPV or IRR) and why? Shared in #community