The following information is available about the investment project to be launched in the company:

The price of the proposed product unit is 5 euros

The planned sales volume is 40,000 units per year

Direct product costs 2.00 euros

Additional annual costs of 40,000 are added

Project life 5 years

Equipment to be purchased at the start of the project 350,000 euros

Working capital investments (at start up) 50,000 euros (investments will be returned after the project is completed)

Annual estimated depreciation expense 40,000

The selling price of the device at the end of the project is the carrying amount

Market research already carried out during the project 10,000

WACC 10%

Questions:

1) Find the project cash flows (including initial investment, annual cash flows and project closing cash flow). Evaluate the project in Excel.

2) Evaluate the NPV and IRR of the project (for the latter it is definitely necessary to use the Excel function = IRR ()) and explain whether the project is economically viable.