A new start-up company has contemplated investing				$265,000	in new equipment.
Their analysis has shown that this new machinery will generate the following cash flows:
		Annual
	Year	Cashflow
	1	$ 20,000
	2	$ 30,000
	3	$ 40,000
	4	$ 40,000
	5	$ 50,000
	6	$ 60,000
	7	$ 60,000
	8	$ 80,000
	9	$ 90,000
	10	$ 90,000
The minimum rate of return that they want to earn is				12%
Based on these projections, please calculate the following for this project:
Q1	Compute the present value.						11 marks
Q2	Compute the net present value.						1 mark
Q3	Compute the estimate for the IRR.						3 marks
Q4	Should the company proceed with this investment?						2 marks
						Total 17 marks
	Use the Interest Rate Table to solve for answer Q1.

Answer rating: 100% (QA)

Q1 To compute the present value of the cash flows we can use the present value formula Present Value ... View the full answer