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A particular project is estimated to have an economic life of 5
years and generate yearly incomes as shown below. The initial
investment is $100,000 and the annual operating costs are estimated
to be $9,000.

Question: A particular project is estimated to have an economic life of 5years and generate yearly incomes...

The appropriate discount rate for this project is 8%.

(a) Draw a cash flow diagram of the project.

(b) Use discounted cash flow techniques to estimate whether the
project should go ahead.

(c) What is the IRR of this project?

Show transcribed image text Income year one Income year two Income year three Income year four Income year fve $25,000 5,00 25,00 $60.000 $110,000

Income year one Income year two Income year three Income year four Income year fve $25,000 5,00 25,00 $60.000 $110,000