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Konrad has studied financing and investment at Hanken (a business school) and is now considering making an investment of 200 000. The investment calculation shows
Konrad has studied financing and investment at Hanken (a business school) and is now considering making an investment of 200 000. The investment calculation shows that the investment can provide an annual net income of 60 000 in the first year, 70 000 in the second year and 80 000 in the third year. Despite good grades in Hanken, Konrad doubts his calculations and now he asks for your help to calculate the net present value (NPV) of incomes to see whether the investment is profitable. The investment period is 3 years, the investment has a residual value of 60,000 in year 3 and the calculation interest rate is 9%. (4 points)
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