Question: A new three-year year project is expected to provide the following incremental cash flows in its years of operation. Revenue Variable Costs Fixed Costs
A new three-year year project is expected to provide the following incremental cash flows in its years of operation. Revenue Variable Costs Fixed Costs Marketing Costs Cash Flows in Year 1 - 3 N$ 100,000 50% of revenue The year zero investment outflow required is N$ 35,000; and the nominal cost of capital is 10%. N$ 20,000 N$ 5000 Corporate tax of 28% required by Namra Depreciation should be accounted for Residual Value is N$ 5000 a) Calculate the NPV of the project using by discounting nominal cash flows at the nominal rate And recommend the management if they should accept the project or not.
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To calculate the net present value NPV of the project we need to discount the incremental cash flows at the nominal rate The NPV is obtained by subtra... View full answer
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