Question $5|-10$ marks

Grand Harbour Inc. makes an investment of $$60,000$ that yields the

following cash flows:

a$.$ What is the net present value $($NPV$)$ if the cost of capital is $10$ percent?

Show all workings. $(8$ marks$)$

b$.$ Should be project be accepted? Why $(2$ marks$)$

Present

Year

Cash Flow

Value

Present Value of Inflows

Present Value of

outflows

Net Present Value

Decision