Question
Beta Constructions is considering a project with the following forecasted details: Initial amount invested is R700,000 and expected residual value is R50,000. Year Cashflows Discount
Beta Constructions is considering a project with the following forecasted details: Initial amount invested is R700,000 and expected residual value is R50,000.
Year | Cashflows | Discount factor |
Year 1 | R150,000 | 0.909 |
Year 2 | R200,000 | 0.826 |
Year 3 | R190,000 | 0.751 |
Year 4 | R150,000 | 0.683 |
Year 5 | R130,000 | 0.621 |
Assuming that the cost of capital for the company is 14%. The cash flows are after tax and depreciation is charged at R60,000 per year. Tax rate is 24%.
Required: 1.1 Calculate each of the following: 1.1.1 Net Present Value (NPV) 1.1.2 Payback period
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Foundations of Finance The Logic and Practice of Financial Management
Authors: Arthur J. Keown, John D. Martin, J. William Petty
8th edition
132994879, 978-0132994873
