A capital investment project requires an investment of £75,000 and has an expected life of four years. Annual cash flows at the end of each year are expected to be as follows: $$\begin{array} { c c }
\text { Year } & \text { Amount } \
1 & £ 40,000 \
2 & £ 30,000 \
3 & £ 10,000 \
4 & £ 35,000
\end{array}$$
a.Compute payback assuming that the cash flows occur evenly throughout the year.
b.Compute the net present value of the project using a 12 per cent discount rate.

Question

A capital investment project requires an investment of £75,000 and has an expected life of four years. Annual cash flows at the end of each year are expected to be as follows: $$\begin{array} { c c } 
\text { Year } & \text { Amount } \
1 & £ 40,000 \
2 & £ 30,000 \
3 & £ 10,000 \
4 & £ 35,000
\end{array}$$ 
a.Compute payback assuming that the cash flows occur evenly throughout the year.
b.Compute the net present value of the project using a 12 per cent discount rate.

Quizplus · Accepted Answer

The Answer of A capital investment project requires an investment of £75,000 and has an expected life of four years. Annual cash flows at the end of each year are expected to be as follows: $$\begin{array} { c c } 
\text { Year } & \text { Amount } \
1 & £ 40,000 \
2 & £ 30,000 \
3 & £ 10,000 \
4 & £ 35,000
\end{array}$$ 
a.Compute payback assuming that the cash flows occur evenly throughout the year.
b.Compute the net present value of the project using a 12 per cent discount rate.

A Capital Investment Project Requires an Investment of £75,000 and Has