Suppose a company is considering investing in a new asset. It is expected to generate income for three years: $15,000 at the end of the first year, $20,000 at the end of the second year and $40,000 at the end of the third year. The interest rate is 4% p.a. compounded yearly. If the asset costs $60,000 to buy now. What is the net present value of this investment (taking both the income and cost into account)?

Answer rating: 100% (QA)

To calculate the Net Present Value NPV of the investment we need to discount the future cash flows f... View the full answer