Your company is considering a project that will cost $13 million. It is thought the project will generate cash flows of $4.2 million per year for 5 years, after construction. At the end of 5 years, there will be no additional expense. Your firms equity cost of capital is 10%.

Part A

Create an NPV profile for this project.

Part B

Identify the IRR on the NPV profile.

Part C

Should your company go ahead with the project?

Part D

How far off could your cost of capital estimate be before your purchase decision would change?