Table 1

PepsiCo is considering a new project. Cash flow analysis indicates the following:

Initial cost in Year 0:

Year 0 -$100,000

Year 1$4,000

Year 2$6,000

Year 3$22,000

Year 4$47,000

Year 5-$82,000

Year 6$27,000

1. Refer to Table 1 above. Assume the weighted average cost of capital = 10%.

A) What is the Net Present Value for this Project?__________

Would you accept or reject the project?_______________

Explain why or why not.

B) What is the Internal Rate of Return for this Project?

Would you accept or reject the project?_______________

Explain why or why not.

C) Which method is better for this project?______

Explain your answer.