Your grandmother set up a $1,000,000 fund for you.You need to invest this money in a fixed
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Question:
Your grandmother set up a $1,000,000 fund for you. You need to invest this money in a fixed asset project. As a result of your feasibility study, you predict the following cash flow for the next 5 years:
Years Cash flows DF (10%)
1 250.000 0,909
2 280.000 0,826
3 300.000 0,751
4 300.000 0,683
5 300.000 0,621
The salvage value of the project is expected to be $400,000. Assuming WACC is 10%;
a) Calculate the project's IRR and discounted payback period.
b) Briefly state the location you chose, which sector you chose and why.
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