1. The Wiley E. Coyote Company is evaluating a new production facility which will build explosives. It is projected to have the following cash flows:

YEAR Cash Flow

1. 0 -$5,000,000 (initial investment)
2. 1 $8,000,000
3. 2 -$3,000,000 (factory rebuild after explosion)
4. 3 $4,000,000
5. 4 -$2,000,000 (factory rebuild after avalanche)
6. 5 $4,000,000

Coyote needs a return of 20% on its investments. Should it proceed with this investment?