Problem:
Write a proposal which applies the methods for calculating a project's viability advising Ford Motor Co. on obtaining funding and managing a project budget, to purchase equipment to increase worker safety. Review Ford's annual report. The initial investment is $25M and the yearly cash inflows are as follows:
Year 2: $5M
Year 3: $10M
Year 4: $15M
Year 5: $12M
Assume all cash flows are at the beginning of the period and a discount rate of 10%.
Include the following information in the proposal (no more than 1300 words):
Q1. Define business needs in an overview of the project, including high-level deliverables to solve the problem.
Q2. Describe the net present value (NPV), internal rate of return (IRR), profitability index, and payback methodologies for calculating the projects viability. Examine the strengths and weaknesses of each methodology.
Q3. Calculate NPV, IRR, profitability index, and payback method. Explain the rationale for accepting or rejecting the project based on its financial viability.