Question 4 25 Marks

Jimmy Reynolds is considering investing R12,000 in a project with the following cash revenues and expenses:

Revenue Expenses

Year 1 R20,000 R18,000

Year 2 R22,000 R19,000

Year 3 R22,000 R20,000

Year 4 R22,000 R17,000

Year 5 R25,000 R17,000

Jimmy requires a minimum rate of return of 8%.

A. Calculate the net cash inflows in each of the 5 years.

B. What is the payback period?

C. What is the net present value of the investment?