Question
The cost of capital is 8% Extracts from NPV (DCF)tables: Rate of discount 8% 9% 10% Year 0 1.000 1.000 1.000 Year 1 .926 .917
The cost of capital is 8%
Extracts from NPV (DCF)tables: Rate of discount 8% 9% 10% Year 0 1.000 1.000 1.000 Year 1 .926 .917 .909 Year 2 .857 .842 .826 Year 3 .794 .772 .751 Year 4 .735 .708 .683 Year 5 .681 .650 .621 Year 6 .630 .596 .564
TASKS a) Calculate the payback period (in years and months). b) Calculate the ARR (accounting rate of return). c) Calculate the NPV (net present value). d) Explain briefly if you think that the project is viable. e) Discuss the potential sources of long-term finance available to a large company. (4 marks) (4 marks) (6 marks) (6 marks) (10 marks)
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