Test Your Design

1. What recommendations would you make if the useful life of the project is three years instead of five years? SIx years?

If the useful life of the project is only three years, the project will not achieve the break even cause at 10%, 12% and 14% discount rate the break even is between the third and the fourth year. So I recommend the discount rate that will be used is less than or equal to 4% so that the break even is between the second and the third year.

If the useful life of the project is six years, the break even will not be change and the IRR will be equal to the discount rate at 11%, thus the project is considered feasible when the discount rate is less tahn 11%.

2. identify at least three additional benefits that might be derived from this project. Estimate their value and include the values in your analysis. What impact do these new benefits have on your economic feasibility?



3. Identify at least one additional one-time cost and at least three additional recurring costs. Estimate their values and include these values in your analysis. What impact do these new costs have on your economic feasibility? Is the project still justifiable? Why or why not?