1 Why should Caledonia focus on project free cash flows as opposed to the accounting profits earned by the project when analyzing whether to undertake the project? ( 5 Points)
2 What are the incremental cash flows for the project in years 1 through 5 and how do these cash flows differ from accounting profits or earnings? ( 30 points)
3 What is the project’s initial outlay? ( 15 points)
4 Sketch out a cash flow diagram for this project. ( 10 points)
5 What is the project’s net present value? ( 10 points)
6 What is its internal rate of return? (10 points)
7 Should the project be taken on? (Explain your answer) ( 5 points)