A capital investment project requires an investment of £450,000. It has an expected life of six years with an annual cash flow of £90,000 received at the end of each year. The company uses the straight-line method of depreciation. Ignore income taxes.
Required:
a.
Compute payback for the project.
b.
Compute the net present value of the project using a 12 per cent discount rate.
c.
Would you recommend this project be accepted? Why or why not?

Question

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The Answer of A capital investment project requires an investment of £450,000. It has an expected life of six years with an annual cash flow of £90,000 received at the end of each year. The company uses the straight-line method of depreciation. Ignore income taxes.
Required:
a.
Compute payback for the project.
b.
Compute the net present value of the project using a 12 per cent discount rate.
c.
Would you recommend this project be accepted? Why or why not?

A Capital Investment Project Requires an Investment of £450,000