hello, i have a financial analysis assignment. Delta Link is considering an investment in a development project
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Question:
hello, i have a financial analysis assignment.
Delta Link is considering an investment in a development project that is expected to cost 120M$ to be paid between 2021 and 2022 equally.
Upon completion of the project, the company estimates a revenue of 40M$ in 2023, growing at 5% per annum until 2028. In terms of costs, the estimate is at 5.5M$ for 2023, 6M$ for 2024 and 6.5M$ for 2025-2028. Management expects to sell the project in 2028 for 30% of the total initial investment.
The management is looking for a return that is not less than 20% and would like to return back its investment in no more than 5 years from completion of the development project.
Based on the above, calculate and interpret the following:
- Net present value
- Internal rate of return
- Payback period
- Discounted payback period
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