The blazer corporation is considering investing in a new piece of equipment that will enable them to produce a new product for a new market. Using the information provided, calculate the specified items and answer these questions:

1. What are the payback period, initial ROI, and net present value of this project?

2. Would you recommend investing in this project? What facts or factors went into your decision and why?

3. If you compare this project to another potential project with an NPV of $18,000 and 14%, which project would you invest in?

4. Now, think about risk management; what uncertainties about the future might make you feel about going ahead with this project? Why?

Cost of equipment $75,250.00

Installation cost $2,450.00

Annual maintenance cost(yearly cost) $$1,200.00

Estimated life of the equipment 5 years

Estimated Net income from sales of product the

machine makes

Dollars Present Value

Year 1 $14,000.00 $13,565.89

Year 2 $23,000.00 $21,595.76

Year 3 $27,500.00 $25,020.36

Year 4 $32,500.00 $28,652.64

Year 5 $9,000.00 $7,688.54

Total $106,000.00 $96,523.19

Blazer's weighted Average cost of capital 3.20%

Blazer's desired ROI on projects 200.00%

Annual Maintenance Contract Dollars Present Value

Year 1 0.00 0.00

Year 2 $1,200.00 $1,126.74

Year 3 $1,300.00 $1,182.78

Year 4 $1,400 $1,234.27

Year 5 $1,500.00 $1,281.42

Total $5,400 $4,825.21

On items, 2&4 please use essay or sentence form for answers, and for other, questions use an excel spreadsheet.