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problem: Perform a financial analysis for a project using the format provided. Suppose the projected costs & benefits for this project are spread over 4 years as follows: Estimated costs are 100,000 dollar in Year 1 & $25,000 each year in Years 2, 3, & 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. [Make a template like the attachment or use the template; however, just remember to use the numbers given in the assignment] to compute & clearly display the NPV, ROI, & year in which payback occurs. In addition, make a paragraph describeing whether you would recommend investing in this project, based on your financial analysis.

Financial Analysis for Project Name

Discount rate

8%

 

 

 

 

 

Assume the project is completed in Year 0

 

 

Year

 

 

 

 

0

1

2

3

Total

 

Costs

100

100

100

100

 

 

Discount factor

1.00

0.93

0.86

0.79

 

 

Discounted costs

            100

          93

          86

          79

        358

 

Benefits

0

200

200

200

 

 

Discount factor

1.00

0.93

0.86

0.79

 

 

Discounted benefits

0

        185

        171

        159

        515

 

Discounted benefits - costs

           (100)

          93

          86

          79

 

        158

NPV

Cumulative benefits - costs

           (100)

           (7)

 

          78

        158

 

 

 

ROI

44%

 

 

 

 

 

 

Payback before Year X

 

 

 

Assumptions

 

 

 

 

 

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M918683

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