1. Use the following information for a project under consideration by Bulldog industries to answer the questions that follow

Initial Cost Time 1 Time 2 Time 3 Time 4 Time 5

-$3,280,000 $600,000 $728,000 $845,000 $670,000 $480,000

PV

-3280000 545454.55 601652.89 634861.01 457619.02 298042.23

The project has a salvage value at time 5 of $1,250,000 and a project cost of capital of 10% and an internal rate of return of 10.345%

1. Calculate the NPV of the project (5 points)
   1. -742370.3
2. Calculate the payback period for the project (5 points)
3. Calculate the discounted payback period for the project (5 points)
4. Calculate the profitability index for the project (5 points)
5. Conduct a sensitivity analysis for the project assuming that the future cash flows (not including the salvage value), the salvage value, and the project cost of capital may all be 10% above or 10% below their initial valu Report your findings in a table similar to the one in the notes (see example setup below) and explain your results (what variable presents the most risk etc.) (10 points)

	NPV when there is a change in:
Change in Variable	Future Cash Flows	Salvage Value	Cost of capital
-10%
base
+10%

6. Conduct a scenario analysis assuming the best case is when all three variables in e) move by 10% in a direction that benefits the firm and a worst case when all three variables in e) move in a direction that is not beneficial to the firm. Assume the base, best and worst case are equally likely. Make sure to calculate the coefficient of variation and explain your results. (10 points)

2. Is the following statement true or false? Explain in detail using the equations or an explanation of each Show why it is true or false you will not get full credit if you just reword the statement (5 points)

Using net present value to evaluate a project will not always provide the same reject / accept decision as using the internal rate of return