Question
Tech Innovations is planning to invest in a new technology with the following forecasted details: Initial amount invested is R450,000 and expected residual value is
Tech Innovations is planning to invest in a new technology with the following forecasted details: Initial amount invested is R450,000 and expected residual value is R20,000.
Year | Cashflows | Discount factor |
Year 1 | R90,000 | 0.909 |
Year 2 | R140,000 | 0.826 |
Year 3 | R130,000 | 0.751 |
Year 4 | R90,000 | 0.683 |
Year 5 | R80,000 | 0.621 |
Assuming that the cost of capital for the company is 11%. The cash flows are after tax and depreciation is charged at R35,000 per year. Tax rate is 27%.
Required: 1.1 Calculate each of the following: 1.1.1 Net Present Value (NPV) 1.1.2 Profitability Index (PI)
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Financial and Managerial Accounting Information for Decisions
Authors: John Wild, Ken Shaw, Barbara Chiappetta
5th edition
978-1259317552, 1259317552, 978-0078025600, 78025605, 978-1259335013, 1259335011, 978-1259347641
