A four-year financial project has a net cash flows of R20,000, R25,000, R30,000 and R50,000 in...

Transcribed Image Text:

A four-year financial project has a net cash flows of R20,000, R25,000, R30,000 and R50,000 in the next four years. It will cost R75,000 to implement the project. If the required rate of return is 20% with no inflation. Find (a) The pay-back period (b) The NPV, and (c) The PI. (d) What would happen to NPV and PI if the inflation rate was expected to be 4% in each of the next years? A four-year financial project has a net cash flows of R20,000, R25,000, R30,000 and R50,000 in the next four years. It will cost R75,000 to implement the project. If the required rate of return is 20% with no inflation. Find (a) The pay-back period (b) The NPV, and (c) The PI. (d) What would happen to NPV and PI if the inflation rate was expected to be 4% in each of the next years?

Answer rating: 100% (QA)

Answer To calculate the payback period we need to determine how long it takes for the cumulative cash flows to equal or exceed the initial investment ... View the full answer