A company is considering additional insulation of its factory. The cost is estimated at SEK 1,000...

  

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A company is considering additional insulation of its factory. The cost is estimated at SEK 1,000 per square meters and that it entails a saving in heating costs of SEK 100 per square meter. The lifespan of the investment is expected to last forever. Calculate and comment of the investment: Net present value at a discount rate of 5%. Internal rate of return (IRR) and compare IRR with the above discount rate in the decision-making situation. Repayment period (for profitable investment, the period may not be more than 11 years). Comment on your calculations and compare advantages and disadvantages with each method to the specific investment situation. A company is considering additional insulation of its factory. The cost is estimated at SEK 1,000 per square meters and that it entails a saving in heating costs of SEK 100 per square meter. The lifespan of the investment is expected to last forever. Calculate and comment of the investment: Net present value at a discount rate of 5%. Internal rate of return (IRR) and compare IRR with the above discount rate in the decision-making situation. Repayment period (for profitable investment, the period may not be more than 11 years). Comment on your calculations and compare advantages and disadvantages with each method to the specific investment situation.

Answer rating: 100% (QA)

To analyze the investment in additional insulation of the factory well use several financial metrics 1 Net Present Value NPV NPV calculates the presen... View the full answer