A Bitcoin mining firm, Quantum Leap SE, is considering an investment in new mining technology. The new investment would require initial funding of €40 million today and further expenditure on Nvidia Servers of €10m in each of the years 6 and 7. The net cash inflow for the years 1 to 4 is €20.34 million per year. Some equipment could be sold at the end of year 5 when the mining ends and together with the cash flows from operations would produce a net cash flow of €40.85 million. 

a) Evaluate the investment using four investment appraisal criteria and explain your recommendation.

b) The required rate of return of Quantum Leap is 12 percent and has been known to use a payback period of 2 years in the past.

Answer rating: 100% (QA)

Ans a Evaluation of the investment using four investment appraisal criterias Investment appraisal criteria 1 Payback Period This criteria indicates th... View the full answer