Snow Pty Ltd is considering an investment project with aninitial outlay of

$110 000. Listed below are the estimated cash flows relevant to the project. The cash flows are equal to net profit before deducting depreciation. Snow Pty Ltd's cost of capital is 14%. Depreciation is calculated on a straight-line basis. The project has a salvage value of $10 000 at the end of its useful life of four years.

aCalculate the accounting rate of return. (Ignoretax)

bCalculate the net present value. (Ignoretax)

cShould the investment project be proceeded with, or not? Explain why you reached thisconclusion.

2016 2017 2018 2019 $ $ Estimated cash flows 35 000 50 000 60 000 35 000 Additional information. Present Value of $1.00 Periods 12% 14% 16% 0.893 0.877 0.862 0.797 0.769 0.743 0.712 0.675 0.641 + 0.636 0.592 0.552 5 0.567 0.519 0.476 + Present Value of a series of $1.00 cash flows Periods 12% 14% 16% 0.893 0.877 0.862 W N 1.690 1.647 1.605 2.402 2.322 2.246 3.037 2.914 2.798 UI 3.605 3.433 3.274