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Table 2-1 shows the example of 'Cash Flow A'. The original investment was 11,000 for the project, which has an expected return of 25,000 over
Table 2-1 shows the example of 'Cash Flow A'. The original investment was 11,000 for the project, which has an expected return of 25,000 over 5 years with the discount rate 7%. Answer the following questions. (i) Calculate the discount factor for year 2, 3, 4 and 5 , as denoted by (?) in Table 2-1. (ii) Calculate the Present Values (PVs) and Net Present Value (NPV) for the 'Cash Flow A', as denoted by (??) in Table 2-1. (Note: NPV = summation of PVs - original investment) (iii) Critically evaluate the result obtained in (b)-(ii) on investment appraisal, viability of the project and suggest a possible solution to increase its NPV. (iv) In the context of investment appraisal, it is important to carry out cost/benefit analysis at the end of every phase of the project life cycle. In addition to monetary terms, what are the other benefits that have to be considered? ITable 2-11 Examole of Cash Flow A
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