Capital Investment Analysis: Green Harvest

Only work on page 2- Calculations

Capital Investment Analysis: Green Harvest

Scenario:

Green Harvest is considering an investment in new technology to remain competitive. The company is evaluating the purchase of a new piece of equipment with the following details:

• Initial Investment Cost: $2,800,000
• Expected Annual Net Cash Inflows: $420,000
• Project Duration: 10 years
• Discount Rate: 7%

Using the provided excel template –calculate the following financial metrics for the proposed equipment purchase:

, calculate the following financial metrics for the proposed equipment purchase:

1. Net Present Value (NPV) Use the discount rate of 7% to determine the present value of future cash inflows and assess whether the investment generates a positive return.
2. Internal Rate of Return (IRR) Calculate the discount rate at which the projects NPV equals zero.
3. Payback Period Determine how many years it will take for the initial investment to be recovered through net cash inflows.