Replace the entire electrical system of the plant and offices by a solar energy system. The cost of the project has been estimated at $ 800,000. The cost of electricity represents 30% of the monthly EBIT. The company has estimated a period of 7 years at 8% interest to recover the investment.

Monthly Sales Status

Sales$ 350,000

COGS$ 275,000

Gross profit on sales$ 75,000

Operating expenses$ 16,666

Depreciation$ 5,000

EBIT$ 53,334

Interest$ 12,000

EBT$ 41,334

Income taxes (40%)$ 16,534

EAT (Net income)$ 24,800

With the above data, answer the following four questions.

1. The cash flow to be discounted amounts to

to.

A. $ 100,002.00

B. $ 185,002.00

C. $ 192,002.00

2. The VPN (NPV) of the project sum

to.

A$ 200,633.00

B. $ 199,633.00

C. $ 99,633.00

3. The project was

to.

A.denies.

B. Is not rejected.

C. Is accepted.

4. In which cash flow the VPN (NPV) is positive.

to.

A. Third flow.

B. Fourth flow

C. Fifth flow

D. None of the above.

5. The mutually exclusive projects establish that, it will be selected that its net present value,

to.

A. Be positive.

B. Be positive and greater to the other.

C. Is equal to zero.

6. If the projected IRR is greater than the opportunity cost of capital, then the NPV of the project is negative.

to.

A. Right

B. Incorrect

C. Irrelevant

7. The company is looking to acquire a new computer system. Cost $ 50,000.00, expected life of 4 years and reduction in the management of the estimated inventory of $ 22,000.00 per year. Opportunity cost of capital 10%. The internal rate of return (IRR) for this project would be _________.

I NEED CALCULATIONS