An investment with a 3year life and a cost of #120000 generates revenue of #25000 in year1 #45000 in year2 and #65000 in year3. If the discount rate is 8% (i) what is the NPV of the investment. (ii) state whether the investment should be accepted or not and why.
An investment with a 3year life and a cost of #120000 generates revenue of #25000 in year1 #45000 in year2 and #65000 in year3. If the discount rate is 8% (i) what is the NPV of the investment. (ii) state whether the investment should be accepted or not and why.
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 16P
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An investment with a 3year life and a cost of #120000 generates revenue of #25000 in year1 #45000 in year2 and #65000 in year3. If the discount rate is 8%
(i) what is the NPV of the investment.
(ii) state whether the investment should be accepted or not and why.
(Using the 12% as your second discount rate to solve the remaining part of the question under
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