Q2

A company has the following financial data:

• Initial investment: $450,000
• Salvage value: $50,000 at the end of 5 years
• Annual operating cash flow before tax: $100,000
• Tax rate: 30%
• Depreciation: Straight-line method over 5 years

The present value factors for 5 years are:

Discount Rate	Present Value Factor
10%	3.791
12%	3.605
14%	3.433
16%	3.274
18%	3.127

Requirements:

1. Calculate the annual depreciation expense.
2. Determine the net operating cash flow after tax.
3. Compute the NPV of the project at a 12% discount rate.
4. Calculate the accounting rate of return (ARR).
5. Assess if the project is financially viable based on NPV and ARR.