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Samsung Year 0 1 2 3 4 5 Initial Investment $1,500,000 Depreciation @ 10% $150,000 $150,000 $150,000 $150,000 $150,000 Book Value at Year-End $1,500,000 $1,350,000
Samsung
Year | 0 | 1 | 2 | 3 | 4 | 5 |
Initial Investment | $1,500,000 | |||||
Depreciation @ 10% | $150,000 | $150,000 | $150,000 | $150,000 | $150,000 | |
Book Value at Year-End | $1,500,000 | $1,350,000 | $1,200,000 | $1,050,000 | $900,000 | $750,000 |
Cash Flows | $200,000 | $300,000 | $250,000 | $200,000 | $150,000 | |
Profit | $50,000 | $150,000 | $100,000 | $50,000 | $0 | |
ARR (%) | 3.33% | 10% | 6.67% | 3.33% | 0% | |
Payback (years) | 4.8 | |||||
NPV @ 10% | $40,000 |
Requirements:
- Calculate the ARR, payback period, and NPV.
- Evaluate the investment's financial feasibility.
- Provide a recommendation.
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