A project has the following revenues and costs (all figures in 000s): Year 1 2 3 4 Revenues 100 310 400 400 Cost 80 150

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A Project Has The Following Revenues And Costs All Figures In 000s Year 1 2 3 4 Revenues 100 310 400 400 Cost 80 150 1 (233.79 KiB) Viewed 15 times

A project has the following revenues and costs (all figures in 000s): Year 1 2 3 4 Revenues 100 310 400 400 Cost 80 150 200 200 Depreciation 80 80 80 80 Operating Profit -60 80 120 120 All the project's revenues correspond to cash sales, and the firm pays all costs, excluding depreciation, in cash. The initial outlay on the project is £320,000. There are no further consequences of taking on the project. Ignore tax. What is the project's accounting rate of return? If the company currently earns a 30% ARR on existing business and does not want to see this reduced, what decision would it make? If the market requires a 15% return on this project, calculate the project's NPV. Should the firm accept the project? Why? 20