Is the project with the returns shown below worthwhile if it requires an initial outlay now of $100,000
and money can be invested elsewhere at 6%? Year 1 $10,000 year 2 $12,000 year 3 $15,000 year 4 $18000 year 5 $20000 year 6 $20000 year 7 $20000 year 8 $15000

To determine if this project is worthwhile given an alternative investment opportunity at 6%, we can calculate its **Net Present Value (NPV)**. NPV helps determine if the project's future cash flows (discounted back to the present) exceed the initial investment.

The formula for NPV is:

\[
\text{NPV} = \sum \left( \frac{\text{Cash Flow}_t}{(1 + r)^t} \right) - \text{Initial Investment}
\]

Where:
- $ \text{Cash Flow}_t $ is the cash flow at time $ t $,
- $ r = 0.06 $ (6% discount rate),
- $ t $ is the year (1 through 8),
- The initial investment is $100,000.

Let me calculate this for you.The Net Present Value (NPV) of the project is approximately **- $1,277**. Since the NPV is negative, the project is not financially worthwhile compared to the alternative investment at a 6% return rate.

Would you like more details or have any questions? 

Here are some related questions to consider:
1. What is the significance of a negative NPV?
2. How would changing the discount rate affect the NPV?
3. Could inflation impact this type of investment analysis?
4. How can we evaluate risk in projects with uncertain cash flows?
5. What other metrics besides NPV can be used to assess project viability?

**Tip:** NPV provides a straightforward comparison between investment options, but it's always good to also consider non-financial factors before making a decision.

Is the project with the returns shown below worthwhile if it requires an initial outlay now of $100,000 and money can be invested elsewhere at 6%? Year 1 $10,000 year 2 $12,000 year 3 $15,000 year 4 $18,000 year 5 $20,000 year 6 $20,000 year 7 $20,000 year 8 $15,000

Evaluate the financial viability of a project requiring a $100,000 initial investment with cash flows over 8 years using the Net Present Value (NPV) method. Determine whether the project is worthwhile compared to a 6% alternative investment rate. This problem is ideal for students in undergraduate finance or business studies.

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