A company is considering an investment which can be characterised as follows:

The initial outlay is supposed to be € 48,000, the interest rate 4 %.

a) Calculate the net present value and state whether the investment is profitable.

b) You question if you can trust your results. To have greater clarity, you decide to recalculate the net present value with different interest rates, choosing 6 %, 8 % and 10 %.

c) Use your results from subtask

b) in drawing up a graph using a coordinate system. The independent variable is represented by the interest rate. The corresponding net present value represents the dependent variable. What can you conclude?

Transcribed Image Text:

Cash outflow in Cash inflow in End of year 1 40,000 25,000 End of year 2 10,000 45,000 End of year 3 20,000 60,000