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Table 1
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PepsiCo is considering a new project. Cash flow analysis indicates the following:
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Initial cost in Year 0:
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Year 0 -$100,000
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Year 1 -$4,000
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Year 2 -$6,000
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Year 3 -$22,000
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Year 4 -$47,000
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Year 5 -$82,000
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Year 6 -$27,000
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1. Refer to Table 1 above. Assume the weighted average cost of capital = 10%.
A) What is the Net Present Value for this Project?__________
Would you accept or reject the project?_______________
Explain why or why not.
B) What is the Internal Rate of Return for this Project?
Would you accept or reject the project?_______________
Explain why or why not.
C) Which method is better for this project?______
Explain your answer.