Alejandra Limited is considering investing in a new project called Seville to manufacture a new durable recycle bag. The
Posted: Sun Jul 03, 2022 1:06 pm
Alejandra Limited is considering investing in a new projectcalled Seville tomanufacture a new durable recycle bag. The initial capital outlayis $900,000and is expected to generate cash flows over 5 years, which isdetailed asfollows:Year $1 210,0002 260,0003 300,0004 320,0005 390,000Assuming the required rate of return is 8 % and management requiresapayback period of 4 years for all projects.Required:(i) Calculate the payback period. Year, Cash Flow, Cumulative Cash FlowNote: Copy the above table and complete the calculations in theanswerfile.(ii) Calculate the net present value. Year ,Cash Flow, Discount Factor at ____ (to fill the discountfactor) ,Present ValueNote: Copy the above table and complete the calculations in theanswerfile.(iii) Advise the management as to whether they should proceed toprocure thenew equipment.