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JS company is considering an investment that requires an outlay of $100,000 today. Cash inflow from the investment are expected to be $10,000 for year
JS company is considering an investment that requires an outlay of $100,000 today. Cash inflow from the investment are expected to be $10,000 for year 1-3, and $30,000 for year 4, 5, 6, 7, and 8. You require a 20% rate of return on this type of investment. Answer the following questions:
- First draw the timeline and specify the cash outflow and inflow for each period.
- Calculate the net present value.
- Calculate the internal rate of return of this investment.
- Calculate the payback periods
- Shall the investment be undertaken?
Please report the answer in the following multiple choices.
a | Discount rate | 0.20 |
year | cash flow | |
0 | ?? | |
1 | ?? | |
2 | ?? | |
3 | ?? | |
4 | ?? | |
5 | ?? | |
6 | ?? | |
7 | ?? | |
8 | ?? | |
b | pv of cash flow since yr 1 | ?? |
npv | ?? | |
c | IRR | ?? |
d | payback period | ?? |
e | yes or no? | ?? |
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