Draw a cash flow diagram of the project

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Reference no: EM131790447

Question: A particular project is estimated to have an economic life of 5 years and generate yearly incomes as shown below. The initial investment is $100,000 and the annual operating costs are estimated to be $9,000.

Income year one $25,000

Income year two $35,000

Income year three $25,000

Income year four $60,000

Income year five $110,000

The appropriate discount rate for this project is 8%.

(a) Draw a cash flow diagram of the project.

(b) Use discounted cash flow techniques to estimate whether the project should go ahead.

Reference no: EM131790447

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