You are the Finance Director of a large multinational company, listed on the stock market. The company is reviewing its corporate plan of making investments in Zambia. The market for plastic and chemical products looks promising and you have been asked to appraise this new investment. The investment will last for ten (10) years and the companys cost of capital is 12 percent. The uses NPV and Payback Period (PBP) appraisal techniques for its planning purposes. The company applies straight line depreciation of 10% on its initial investment cost and any scrap value at the end of the project is added to the terminal cash flows and discounted under NPV. The following forecasts have been made regarding the performance of the investment.

The initial cost of the investment is estimated at K1.0 Billion with Zero scrap value.

Estimated accounting profits in (K millions)are :

Year	1	2	3	4	5	6	7	8	9	10
Sales	800	600	700	900	950	1200	1300	1300	1300	1300
Operating Expense	(550)	(450)	(550)	(600)	(720)	(850)	(880)	(910)	(1000)	(980)
Depreciation	(100)	(100)	(100)	(100)	(100)	(100)	(100)	(100)	(100)	(100)
Taxation 30%	(45)	(15)	(15)	(60)	(39)	(75)	(96)	(87)	(60)	(66)
Net Profit/(loss)	105

Required

Complete the table and calculate the net cashflows from year 2-10. ( 2 marks)

Appraise the project using NPV and PBP and advise the board on the viability of this project. (12 marks)

c) State three advantages and disadvantages of NPV and PBP methods. (6 marks)