Computation of net present value and return on investment
Perform a financial analysis for a project using the format provided .Assume the projected costs and benefits for this project are spread over four years as follows: Estimated costs are $100,000 in Year 1 and $25,000 each year in Years 2,3, and 4. Estimated benefits for $0 in Year 1 and $80,000 each year in Years 2,3, and 4. Use an 8 percent discount rate. (Create a template like the attachment or use the template; however, just remember to use the numbers given in the assignment) to calculate and clearly display the NPV, ROI, and year in which payback occurs. In addition, write a paragraph explaining whether you would recommend investing in this project, based on your financial analysis.
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Financial Analysis for Project Name
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Discount rate
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8%
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Assume the project is completed in Year 0
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Year
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0
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1
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2
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3
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Total
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Costs
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100
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100
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100
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100
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Discount factor
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1.00
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0.93
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0.86
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0.79
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Discounted costs
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100
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93
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86
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79
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358
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Benefits
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0
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200
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200
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200
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Discount factor
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1.00
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0.93
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0.86
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0.79
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Discounted benefits
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0
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185
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171
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159
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515
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Discounted benefits - costs
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(100)
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93
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86
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79
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NPV
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Cumulative benefits - costs
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(100)
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(7)
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158
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44%
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Payback before Year X
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Assumptions
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