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Question 4 (35 points): Consider a discount rate of 8% for the following cash flow: L=$160,000 C-160,000C-135,000 .000 1-60,000-160,000 -80,000-30,0001-95,000 -110,000-120,000 1-130,000 Year 1 2

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Question 4 (35 points): Consider a discount rate of 8% for the following cash flow: L=$160,000 C-160,000C-135,000 .000 1-60,000-160,000 -80,000-30,0001-95,000 -110,000-120,000 1-130,000 Year 1 2 3 4 T o 10 C: Cost, I: Income, L: Salvage Value Calculate the following economic yardsticks for this project a) NPV b) ROI c) IRR d) Benefit Cost Ratio e) Present Value Ratio f) Payback time g) Based on above results, conclude if this investment is economically satisfactory and why (how your calculations compare to the guidelines for economic projects) Note: One may use IRR function in software and or Excel, but need to show the equations (balance of costs and revenues)

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