just finished the business plan of his start-up company. According to the projections he carried-out, the...

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just finished the business plan of his start-up company. According to the projections he carried-out, the initial investment is 1,500,000 SAR (assume that we are in the beginning of 2023), which will be financed by his family (500,000 SAR) and with a bank loan the rest (1,000,000 SAR). The bank loan interest rate is 6% and his family is happy with receiving the same rate of return on the investment. The following table includes Edward's projections for the cash-flow to be generated in the 5 years, after which Edward plans to sell the company for a market value of 2,000,000 SAR. Cash-flows Year 2023 100,000 2024 300,000 2025 400,000 2026 500,000 2027 600,000 Terminal Value (2027) 2,000,000 a) What is the project's expected Net Present Value? (Hint: use the NPV excel function and, after, consider the initial investment) Answer: b) What is the project's expected Internal Rate of Return? (Hint: use the IRR excel function) Answer: just finished the business plan of his start-up company. According to the projections he carried-out, the initial investment is 1,500,000 SAR (assume that we are in the beginning of 2023), which will be financed by his family (500,000 SAR) and with a bank loan the rest (1,000,000 SAR). The bank loan interest rate is 6% and his family is happy with receiving the same rate of return on the investment. The following table includes Edward's projections for the cash-flow to be generated in the 5 years, after which Edward plans to sell the company for a market value of 2,000,000 SAR. Cash-flows Year 2023 100,000 2024 300,000 2025 400,000 2026 500,000 2027 600,000 Terminal Value (2027) 2,000,000 a) What is the project's expected Net Present Value? (Hint: use the NPV excel function and, after, consider the initial investment) Answer: b) What is the project's expected Internal Rate of Return? (Hint: use the IRR excel function) Answer:

Answer rating: 100% (QA)

a To calculate the Net Present Value NPV we need to discount each cash flow back to the present ... View the full answer