You have been asked to give a written analysis and recommendation to the management team of GRIZ, Inc.Your presentation should be professional and concise with a definitive recommendation for the management team to consider.

This project involves a new type of widget.The management team has predicted that the proposed project would result in sales of 6,000 units of the widget per year at a price of $1,000 each.The variable costs are estimated at $400 per unit and the product would have a four-year life.

Fixed costs for the project would run $450,000 per year and there would be an initial investmentof $1,250,000 in manufacturing equipment.The equipment would be depreciated using MACRS over seven years.In year four, the equipment would be worth half of the purchase price.

GRIZ, Inc would invest $1,150,000 in net working capital at the start of the project.After that, net working capital requirements would be 25% of sales.Assume a 21% tax rate.

In prior analysis, the management team has used a minimum 2.5-year payback and 3-year discounted payback when determining the viability of projects.Assume a 9% discount rate.

The MACRS Table is below:

MACRS Percentage

1 -14.29 %

2 - 24.49 %

3 -17.49 %

4- 12.49 %

1) please analyze & describe the limitations of each method used to evaluate this project

-The Methods used to Evaluate: NPV, IRR, Payback Period, Discounted Payback Period, and Profitability index

for reference, you can view the methods/calculations for this project here: https://www.mediafire.com/file/bja3y3ikjh75n7w/GRIZ+Inc.xlsx/file

• Note: I am asking for the written response as to what limitations exist for each method used and a description of the limitations