Question
1) Richard & Company Inc. is planning to buy machine A which will cost 10 million. The expected life of the machine is 5 years.
1) Richard & Company Inc. is planning to buy machine A which will cost 10 million. The expected life of the machine is 5 years. The salvage value of the machine is nil. Richard and Company Inc. is expecting cash-flow of 5 million for the first two years, 3 million for the next 2 years and 2 million in 5th year. Operating expense is 1 million for every year. Present value of future cash inflow 10.4315 (which is discounted cash flow). (Assumption: No tax). Answer the following questions:
- Calculate NPV and based on the value of NAV explain the project should be accepted or rejected?
- What is IRR when discount rate is 12%?
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Handbook Of Recent Advances In Commodity And Financial Modeling
Authors: Giorgio Consigli, Silvana Stefani, Giovanni Zambruno
1st Edition
3319613189, 978-3319613185
