Your company is evaluating a capital project with an initial cash outlay of $124,800. This equipment has annual net cash flows after tax of $11,422,an expected life of 18 years, and a one-time end of project after tax cash flow of $2300. The firms weighted average cost of capital is 8%.

Evaluate the project using NPV, IRR, PI, and PB.

anwser:

NPV = -$17,179 < 0 so Reject

IRR = 5.97% < 8% so Reject

PI = 0.86 < 1 so Reject

PB = 10.93 years so Reject

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