Question 2 - Learning Goal #6 (09 degrees):

An institution that wishes to achieve an investment project that includes: buying land for 600 riyals, purchasing a building for 750 riyals (15 years of fixed depreciation), purchasing equipment worth 400 riyals (fixed depreciation for 5 years), purchasing equipment worth 300 riyals (5-year fixed depreciation).

The estimated study of sales that can be achieved during the project's exploitation period (5 years), explained in the following:

year	1	2	3	4	5
Sales in Real	2900	5300	6300	8000	7400

The following information was also available:

* The variable costs of exploitation are 80% of sales.

* Fixed costs outside of the distractions 300 riyals in the first and second years, 350 riyals in the third and fourth year and 400 riyals in the fifth year.

* The remaining net value of the tax for the project at the end of the fifth year was estimated at 200 riyals.

* Financing needs for the exploitation cycle (working capital requirement) account for 10% of the following year's sales, and the needs are funded at the beginning of each year and retrieved at the end of year 5.

* Tax rate 40%.

Required:

Estimating the cash flows of the investment project.

Calculating the net present value of the project if the cost of capital is 10%. Is the project workable?