An investment project requires an initial investment of P 43,000 and will produce an annual

revenue of P 10,000 over its five years' life. Use the

i. Present Worth method to decide whether the investment is worthwhile if the prevailing

[5 marks]

market rate is 6% compounded annually. ii. Is your decision the same if the prevailing market rate is 5% compounded annually?

15 marks]

Internal rate of return (IRR) method to decide whether the investment is worthwhile if the prevailing market rate is 5% compounded annually.

15 marks]

D. An investment project requires an initial investment of P43,000 and will produce an annual revenue of P10,000 over its five years' life. Use the: i. Present Worth method to decide whether the investment is worthwhile if the prevailing market rate is 6% compounded annually. [5 marks] ii. Is your decision the same if the prevailing market rate is 5% compounded annually? [5 marks] iii. Internal rate of return (IRR) method to decide whether the investment is worthwhile if the prevailing market rate is 5% compounded annually. [5 marks]