You have an opportunity to invest in an income generating asset at an initial cost of N$80 000 and you are expecting an annual cash inflow from this investment of N$28 000 for the first 4 years. Due to improving technology you will have to upgrade this asset at an additional cost of N$35 000 early in the 5^th year, where after the expected cash inflow increases to N$33 000 for the next 3 years, before the asset has to be replaced. The cost of capital (discount rate) is set at 10%.

Determine:

1. The net present value (NPV) (10 marks)
2. The discounted payback period (4 marks)
3. Would you invest in this asset? Why? (2 marks)

(answer in table form)

Interest Factors:

PERIOD	1	2	3	4	5	6	7
Future Value Interest Factors (FVIF)	1,100	1,210	1,331	1,464	1,611	1,772	1,949
Present Value Interest Factors (PVIF)	0,909	0,826	0,751	0,683	0,621	0,564	0,513