2. 2.1 2.2 2.3 2.4 Getum Ltd is considering investing in project Zeta. The following details relate to this project. Project Zeta R562 500 Initial investment Expected economic lifetime Minimum required rate of return Net annual cash inflows: 1st year 2nd year 3rd year 4th year 4 years 12% R180 000 R195 000 R210 000 R220 000 Required Calculate the following in respect of Project Zeta. The payback period (answer expressed in years, months and days) The net present value (NPV) (round off amounts to the nearest Rand) The internal rate of return (IRR) (answer correct to 2 decimal places) Refer to your calculations in question 2.2 and state whether Getum Ltd should invest in Project Zeta or not. Motivate your answer.

2. 2.1 2.2 2.3 2.4 Getum Ltd is considering investing in project Zeta. The following details relate to this project. Project Zeta R562 500 Initial investment Expected economic lifetime Minimum required rate of return Net annual cash inflows: 1st year 2nd year 3rd year 4th year 4 years 12% R180 000 R195 000 R210 000 R220 000 Required Calculate the following in respect of Project Zeta. The payback period (answer expressed in years, months and days) The net present value (NPV) (round off amounts to the nearest Rand) The internal rate of return (IRR) (answer correct to 2 decimal places) Refer to your calculations in question 2.2 and state whether Getum Ltd should invest in Project Zeta or not. Motivate your answer.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 21P

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