Reference no: EM132489738

Point 1: The directors of supermarket are interested in a new type of racing boat that ejects a fuel residue into the water . despite a lot of controversy relating to this boat. the directors believe that they can sell 100 units to countries where water pollution is not high concern.

Point 2: The selling price will be $50000 per unit and the variable cost per unit will be 60 per cent of revenue. the project should have a life of 4 years. the directors require 25 percent return on a new product such as this one. Fix cost for the project will be $1000000 per year. the company will need to invest a total of $1800000 in manufacturing equipment. this equipment will be depreciated at at 15 per cent straight line in 4 years . the equipment will be worth half of what the company paid for it. the project requires initial investment of $300000 for net working capital that can be recovered fully at the end of the project. the corporate tax is 30%.

Required

Question 1- prepare table of cash flow

Question 2- calculate NPV, IRR, Payback period