The MS Utility Corp.

The MS Utility Corp. is planning a new investment project which is expected to yield cash inflows of $150,000 per year in Years 1 through 3, $165,000 per year in Years 4 through 8, and $95,000 in Years 9 through 12. This investment will cost the company $580,000 today (initial outlay). We assume that the firm’s cost of capital is 8.8%. (1) Draw a time line to show the cash flows of the project.

Cash Flow YearPresent Value -580,000 0(580,000.00)138,888.89128,600.82119,074.84121,279.93112,296.23112,296.2396,275.9289,144.3747,523.6544,003.3840,743.8737,725.81 150,000 1 150,000…

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