The medium size company Amazing Integration Ltd. was preparing to invest into several projects to increase its companys value as well as to expand its market share and to integrate the new technology.

The recently elected CEO of the company, Mr. Jason Smith, asked the CFO and other financial managers to present the matrix for projects evaluation. He was summarizing the financial experts presentation and got the following summary: if a company invests in a profitable project, it will increase the owners' equity and the value of the company by the amount equal to the NPV. If a company invests in an unprofitable project, it will decrease the owners' equity and the value of the company by the amount equal to the NPV. NPV has also a similar effect on stock prices. Projects with a positive NPV increase the price of a stock by an amount equal to the NPV per stock, whereas project with a negative NPV decrease the price by an amount of the NPV per stock.

Amazing Integration Ltd. is considering whether or not to proceed with an investment project that requires an initial outlay of USD 100,000. The after-tax cash inflows are estimated to amount to USD 20,000 at the end of the first and second year and to USD 30,000 at the end of the third, fourth, and fifth year. The required rate of return for the project is 4.4%.

Question 1. Help the team of financial managers to evaluate the project using the NPV method to make the right investment decision.