Groot plc is investing in a new fleet of delivery vehicles. The vehicles will cost 700,000...

 

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Groot plc is investing in a new fleet of delivery vehicles. The vehicles will cost £700,000 immediately, and will run for 4 years, after which they will be sold at a scrap value of £45,000. They will bring in revenues of £400,000 per year, and incur running costs of £80,000 per year for each of the 4 years. What is the net present value of the project at a 10% discount rate? Groot plc is investing in a new fleet of delivery vehicles. The vehicles will cost £700,000 immediately, and will run for 4 years, after which they will be sold at a scrap value of £45,000. They will bring in revenues of £400,000 per year, and incur running costs of £80,000 per year for each of the 4 years. What is the net present value of the project at a 10% discount rate?

Answer rating: 100% (QA)

To calculate the net present value NPV of the project we need to determine the cash flows for each y... View the full answer