3. The following table shows the cash flows of the investment in a financial product XYZ: Year Cash Flow ($) -150,000 72,000 3 82,000 10,500 Suppose that the annual interest rate of the investment is 4.0% p.a. compounded half-yearly. (a) Compute the Net Present Value (NPV) of the above cash flows. (Correct to the nearest dollar) (b) Based on the result in part (a), justify whether the investment is profitable or not.
3. The following table shows the cash flows of the investment in a financial product XYZ: Year Cash Flow ($) -150,000 72,000 3 82,000 10,500 Suppose that the annual interest rate of the investment is 4.0% p.a. compounded half-yearly. (a) Compute the Net Present Value (NPV) of the above cash flows. (Correct to the nearest dollar) (b) Based on the result in part (a), justify whether the investment is profitable or not.
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter26: Capital Investment Analysis
Section: Chapter Questions
Problem 4MAD
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