Tropic Investments is considering a project involving an initial cash outlay for an asset of 200,000. The

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Tropic Investments is considering a project involving an initial cash outlay for an asset of £200,000. The asset is depreciated over five years at 20% p.a. (based on the value of the investment at the beginning of each year). The cash flows from the project are expected to be:

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• What is the payback period?
• What is the return on investment (each year and average)?
• Assuming a cost of capital of 10% and ignoring inflation, what is the net present value of the cash flows? (Use the tables rather than a spreadsheet to answer this question.)
• Should the project be accepted?

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