Ms Claire Samba is assessing a proposed 4-year investment requiring an initial outlay of $200,000. From her analysis she has predicted future end-of-year operating cash flows arising from the investment as follows: year 1 - $12,000 (cash inflow); year 2 - $30,000 (cash inflow); year 3 - $60,000 (cash inflow) and year 4 - $25,000 (cash outflow).
At the end of year 4 Claire also expects to realise $280,000 from the sale of the investment. As Claire's trusted adviser you have assessed the risk of the investment being 9% p.a. compounded monthly.
Would you recommend Claire proceed with the investment based on the information provided?

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The Answer of Ms Claire Samba is assessing a proposed 4-year investment requiring an initial outlay of $200,000. From her analysis she has predicted future end-of-year operating cash flows arising from the investment as follows: year 1 - $12,000 (cash inflow); year 2 - $30,000 (cash inflow); year 3 - $60,000 (cash inflow) and year 4 - $25,000 (cash outflow).
At the end of year 4 Claire also expects to realise $280,000 from the sale of the investment. As Claire's trusted adviser you have assessed the risk of the investment being 9% p.a. compounded monthly.
Would you recommend Claire proceed with the investment based on the information provided?

Ms Claire Samba Is Assessing a Proposed 4-Year Investment Requiring