Draw the cash flow diagram

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In order to vitrify a formulated ceramic tile, it is subjected to high temperature through a kiln at 110oC. A certain start-up bought a new kiln for their ceramic tile product at 300,000.00 and has a salvage value of 20,000.00 at the end of 6 years. It is expected that their product will earn 175,000.00 per year. However, the annual maintenance cost of the kiln is projected to be at 100,000.00 at the end of year one and will increase by 5,000.00 per year. If the MARR is 10%:

a) Draw the cash flow diagram.

b) Is this a low-risk venture? Prove your answer using the Present Worth Method. show your complete solution in your solution sheet.

c) Solve the Internal Rate of Return (IRR).show complete solution in solution sheet.

d) Solve the External Rate of Return (IRR). show your complete solution in solution sheet.

e) What is the payback period of the investment? then show complete solution in solution sheet.

Reference no: EM132761924

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