Question
1) The Sisyphean Company is planning on investing in a new project. This will involve the purchase of some new machinery costing $225,000. The Sisyphean
1) The Sisyphean Company is planning on investing in a new project. This will involve the purchase of some new machinery costing $225,000.
The Sisyphean Company expects cash inflows from this project as detailed below:
| Year 1 | Year 2 | Year 3 | Year 4 |
| $86,915 | $86,915 | $86,915 | $86,915 |
The appropriate discount rate for this project is 20%.
The internal rate of return (IRR) for this project is closest to:
2) The Sisyphean Company is planning on investing in a new project. This will involve the purchase of some new machinery costing $410,000.
The Sisyphean Company expects cash inflows from this project as detailed below:
| Year 1 | Year 2 | Year 3 | Year 4 |
| $200,000 | $225,000 | $275,000 | $200,000 |
The appropriate discount rate for this project is 14%.
The net present value (NPV) for this project is closest to:
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Financial Mathematics Derivatives And Structured Products
Authors: Chan
1st Edition
9811336954, 978-9811336959
