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What is Project Investment Analysis and Cash Flows about?

The company is considering investing in a new water purification system project that would sell 25,000 systems per year. The total investment costs are $2.5 million with fixed annual costs of $325,000 and variable costs of 40% of sales. The cash flows were calculated over the 5 year project period. The NPV of the project is $965,091.12 and the IRR is 24.25%, both of which are above the required return of 12%. Therefore, the company should invest in the project.

Author

Farzan Yahya Habib

Language

EN