Reference no: EM132926234

Question - The following information is for a proposed project that will provide the capability to produce a specialized product estimated to have a short market life:

-Capital investment is $1,000,000.

-The cost of depreciable property, which is part of the $1,000,000 total estimated project cost, is $650,000.

-The depreciable property is categorized in CCA 30% class, with 50% rule applicable.

-The project analysis period is 3 years.

-Annual operating and maintenance expenses are $636,000 in the first year, and then increase at the rate of 11 % per year.

-The company expects to make $1,250,000 of revenues from the sales of the new product.

-Estimated salvage value of depreciable property at the end of three years is $280,000.

-Corporate taxes are 45 %

-MARR is 14 % per year.Calculate a 3-year cash flow statement for the project, and then calculate the following two questions listed below using Excel:

Required -

What the Net Present Value of the project?

What the IRR of the project?