Swift Technologies is planning to invest in a new data center. Details of the project are:

• Cost of Data Center: EUR 750,000
• Useful Life: 12 years
• Residual Value: EUR 100,000
• Depreciation Method: Straight Line
• Cost of Capital: 11%

Expected cash flows:

Year	Cash Flow	Profit
1	100,000	20,000
2	110,000	25,000
3	120,000	30,000
4	130,000	35,000
5	140,000	40,000
6	150,000	45,000
7	160,000	50,000
8	170,000	55,000
9	180,000	60,000
10	190,000	65,000
11	200,000	70,000
12	210,000	75,000

Requirements:

a. What is the importance of incremental cash flows in investment decisions? b. Differentiate between the ARR and the IRR. c. Calculate the following:

• Payback period.
• NPV.
• IRR.
• Profitability Index.