wgu paper

wgu paper

FNT1 Task 2
Brandon Sisler

Net cash flow without depreciation
For year two
Expected annual sales $3,200,000
Expected annual cost $2,400,000
Depreciation expense $0
Income before taxes $600,000
Income at marginal rate $168,000
Net Income
Net cash flow

*Depreciation affects cash flow by minimizing the
sum of money a company pays in taxes.
After calculating year two without deprecation we
come up with an annual cash flow of $432,000.

When calculations with depreciation are included
we see an annual cash flow of $534,900.

That leaves us with a difference of $102,900

Net Preset Value
Based on the results of NPV, I recommend that
Entrepreneur D invest in the product.

Being that the NPV is at a positive number
investing in the project safe investment.

This means that cash inflow outweighs cash
outflow on a present value basis.

Internal Rate of Return
Discount rate is at 12%

The entrepreneur should invest because the
product will repay capital cost incurred.






Takes percentage of profit
into account.

Based on profits

Not time sensitive

Does not factor in percent
of profit
Based on current values of
cash inflows
Adjusted for time.

PayBack Period
5 years 3 months

Very simple
Make quick
Calculate fastest
return on investment
to recover money.


Focuses on short
term profitability
Possibility of
overlooking a good
Time value of money
is ignored


He wanted to payback his investment in eight
years and he will hit that in five years three
months. This means I would recommend
producing this product.

Weighted average cost of capital
and npv
WACC is a measure of the cost of each unit of
money related to time.
●WWCC for this product is 12%.
●NPV adjust cash...

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