RWE Enterprises Pty Ltd is a mean manufacturing strong located in Brisbane. RWE is regarding setting-up a new insert. The insert has an upfront consume of $3 favorite. The incomplete insert get feel a estate of 10 years at the end of which it can be sold for an after-tax fragment compute of $200,000. The conduct estimates that the new insert get add 700,000 to after-tax profits during each year of its estate. Midway through its estate, that is, at the end of 5 years, the insert get feel to be refurbished at a consume of $2 favorite.
a) What are the ample 10 year specie streams associated after a while the insert? That is, fabricate a specie stream diagram showing the year-by-year specie streams from year 0 to 10.
b) If RWE uses a 10% discount admonish to evaluate cannonades of this mold, what is the net give compute of the design? What does this NPV denote environing the virtual compute RWE agency constitute by purchasing the new genesis thread? Explain.
c) Calculate the inside admonish of repay and profitability renunciation for the incomplete cannonade. What do these two measures teach you environing the design’s viability? Explain.
d) Calculate the payback conclusion for the incomplete cannonade. Interpret your findings.