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A business undertakes high-risk investments and requires a minimum expected rate of return of 17% pa on its investments. A proposed capital investment has the

  1. A business undertakes high-risk investments and requires a minimum expected rate of return of 17% pa on its investments. A proposed capital investment has the following expected cash flows:

Year $

0 (50,000)

1 18,000

2 25,000

3 20,000

4 10,000

State, on financial grounds alone, whether this project should go ahead.

Note: You should calculate the NPV of the project at a cost of capital of 15% and 20%

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