Question
4. You have a fourth project that will cost 1700 to invest in one year from now, will generate a cash inflow of 150 starting
4. You have a fourth project that will cost 1700 to invest in one year from now, will generate a cash inflow of 150 starting in year three and continuing forever. If the discount rate is 8%, what is the NPV and should you accept the project based on the NPV?
5. Finally, you have a fifth project that will cost 1500 to invest in today, will generate a cash inflow of 165 in year one, which will grow at a constant rate of 2% for 29 additional years (for a total of 30 cash inflows), and will have a shutdown cost of 1000 at the end of year 30. If the projects discount rate is 10%, what is the NPV and should you accept the project based on the NPV?
please show the formula for question 5
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