J&E Enterprises is considering and investment which produces no cash flows for the first year. In...
J&E Enterprises is considering and investment which produces no cash flows for the first year. In the second year, the cash inflow is $47,000. This inflow will increase to $198,000 and then $226,000 for the following two years, respectively, before ceasing permanently. The initial investment will cost $318,000. The firm requires a 15.5 percent rate of return and has a required discounted payback period of three years. Should the project be accepted? Why or why not? show all work
| Year | Cash flow | Discounted cash flow @ 15.5% |
Cumulative cash flow |
|---|---|---|---|
| 1 | $0 | $0.00 | $0.00 |
| 2 | $47,000 | $35,321.72 | $35,231.72 |
| 3 | $198,000 | $128,504.77 | $163,736.49 |
| 4 | $226,000 | $126,993.21 | $290,729.70 |
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