question 1,2,3

Q.1: Basic Capital Budgeting You are a financial analyst of SCCO Corporation. The director of capital budgeting has asked you to evaluate the new plant distribution system project. The costs of acquiring a new forklift and other equipment are $20,000. It is expected that the new forklift would has 4-year expected physical life. SSCO's cost of capital is 8%. The estimated cash flow from the new project is as follows: Year 0 2 3 Cash Flow -20.000 5,000 6,000 7,000 8,000 1. Calculate the project net present value (NPV), internal rate of return (IRR), modified internal rate of return (MIRR), profitability index (Pi), payback period and discount payback period. 2. Would the project be accepted or rejected? Why? 3. Assume that the project is implemented and the salvages value of the forklift are given below. Should SCCO use forklift until the end of its 4- year physical life? If not, what is it optimal economic life? Year 0 1 2 3 4 Savage value 20,000 13,000 8,000 3,000 0