Question 3:

NesTalk limited is a telecommunication firm and is looking forward to expanding its business by investing in computer network telecommunication projects for five years. The project will enable them with the latest technology in networking coupled with increased internet speed and better network coverage. The financing options have been provided by the bank and below the table, there is a breakdown of the expected cash flow from each of these options and the discount rate offered by the bank. The newly appointed Management Accounting intern has been provided with this data. Based on the numbers below, using any capital budgeting decision-making technique, fill in the blanks in the table and suggest the best possible decision for the company. Which alternative should be selected by the management intern?

Project Title: Investment in Advanced networking options (width and speed for internet)

Capital Expenditure: $25000, useful life of expenditure = 5 years

Expected annual return from the expenditure = $15000

Discount rate offered by the bank = 3%,5%, 8%

Year	Capital investment	Annual return	Net cash flow	Present value of Cash flows
				3%	5%	8%
0	$25000		-25000	-25000	-25000	-25000
1
2
3
4
5
Total

Decision: