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A financial analyst predicts an investment plan that will require IDR 800 million in funds. The investment is estimated to have an economic age of
A financial analyst predicts an investment plan that will require IDR 800 million in funds. The investment is estimated to have an economic age of 4 years. The estimated profit and loss for each year is as follows:
1st year and 2nd year | 3rd year and 4th year | |
Sales income | IDR 800000000 | IDR 865000000 |
Costs | ||
Depreciation | IDR 165000000 | IDR 165000000 |
Cash | IDR 100000000 | IDR 105000000 |
Total Cost | IDR 265000000 | IDR 270000000 |
Profit before tax | IDR 535000000 | IDR 595000000 |
Tax (35%) | IDR 187250000 | IDR 208250000 |
Profit after tax | IDR 347750000 | IDR 386750000 |
At the end of the fourth year, it is estimated that a cash inflow terminal of Rp. 100 million will be obtained.
Questions
1). what is the NPV of the investment, if r = 17%?
2). what is the profitability index
3). what is the average rate of return
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