If rwe uses a 10 poercent discount rate to evaluate


Year After-tax Cash Flow

0 ($3,000,000)

1 700,000

2 700,000

3 700,000

4 700,000

5 -1,300,000

6 700,000

7 700,000

8 700,000

9 700,000

10 900,000

A. If RWE uses a 10 poercent discount rate to evaluate investments of this type, what is the net present value of the project? What does this NPV indicate about the potential value RWE might create by purchasing the new product line?

B. Calculate the internal rate of return and profitability index for the proposed investment. What do these two measures tell you about the project's viability?

C. Calculate the payback and discounted payback for the proposed investment, Interpret your findings.

(show calculation)

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Financial Management: If rwe uses a 10 poercent discount rate to evaluate
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