Question
TRANS INC ( OWNERS OF THE TRANS-ATLANTIC PROJECT), expects a 21% rate of return on their investments. They are considering a 15 year project which
TRANS INC ( OWNERS OF THE TRANS-ATLANTIC PROJECT), expects a 21% rate of return on their investments. They are considering a 15 year project which will cost them $8m immediately, $10m at the end of each year for the first five years, $2.2m at the end of each year for the next five years, and $3.77m at the end of each year for the last 5 years of the project. Should they take on the project if it will return $3m at the end of each year for the first 3 years, $4m at the end of each year in the next 4 years, and $6m at the end of each year for the last 8 years?
c
- Prepare a fully documented timeline of all cash flows
- Calculate the NPV of the project.
- Calculate the ROI of the project.
- Determine the payback period of the project
- Would you go ahead with the project? Why/why not?
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