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2. Sultan Suhail ltd. is considering to acquire equipment costing $2,00,000. The expected useful life of the equipment is five years with no residual value.
2. Sultan Suhail ltd. is considering to acquire equipment costing $2,00,000. The expected useful life of the equipment is five years with no residual value. The minimum desired rate of return is 10% The expected net cash flow for each of the five years and the net present value of the proposal is as follows Years Expected cash flow $70,000 $60,000 $50,000 $40,000 $40,000 First yearx 909 Second yearx 826 Third year x Fourth year x Fifth yearX 751 683 621 Calculate a) Present Value of net cash flow for all the five years and total net cash flow b) Net present Value c) Find whether the project will provide more than the desired rate of return and provide your 3 marks 2 marks suggestions 2 marks
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