Caledonia

Week 4 Caledonia Team Assignment

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?
3 What is the project’s initial outlay?
4 Sketch out a cash flow diagram for this project.
5 What is the project’s net present value?
6 What is its internal rate of return?
7 Should the project be taken on?