Computation of net present value and return on investment

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Reference no: EM1314233

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.

Financial Analysis for Project Name

Discount rate

Assume the project is completed in Year 0

Year

Total

Costs

100

Discount factor

1.00

0.93

0.86

0.79

Discounted costs

100

358

Benefits

200

Discount factor

1.00

0.93

0.86

0.79

Discounted benefits

185

171

159

515

Discounted benefits - costs

(100)

158

NPV

Cumulative benefits - costs

(100)

(7)

158

ROI

44%

Payback before Year X

Assumptions

Reference no: EM1314233

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