Question: 1The table below sets out data on an investment project: Annual cash flow 2.5m Investment cost 15m Duration Ten years Beta 1.4 Risk-free rate 3%

1The table below sets out data on an investment project:

Annual cash flow	2.5m
Investment cost	15m
Duration	Ten years
Beta	1.4
Risk-free rate	3%
The average return on the market index	7%

What is the net present value of the project? Should the project be accepted?

2Carry out a sensitivity analysis of the project concerning the annual cash flow, considering a 10% increase and a 10% reduction in the annual cash flow. Make the appropriate recommendations about whether you should invest.

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