PT LEUVENARDI  is considering canceling its investment because the directors are not sure about two things. First, whether the credit interest rate will remain at 20%, and pray, whether economic profitability will increase more than 16% in the second year and beyond. If the investment is cancelled, the company does not need to withdraw the remaining credit amounting to IDR 2,000 million, and can repay the used credit amounting to IDR 1,000 million. Assets that have already been purchased can be resold for only Rp. 800 million. Would it be better to cancel the investment plan?

Answer rating: 100% (QA)

To determine whether it would be better to cancel the investment plan we need to calculate the net p... View the full answer