Assume cash flows of a multinational company as follows: Initial cash outlay of Kshs. 20,000,000. The...

 

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Assume cash flows of a multinational company as follows: Initial cash outlay of Kshs. 20,000,000. The expected cash inflows associated with the company for the first to the fourth year are Kshs: 3,315,000; 2,295,000; 4,275,000; and 8,315,000 respectively. The salvage value of the project in the fifth year is Kshs. 2,500,000 and the cost of capital is provided as 16%. Required: Determine whether the MNC should accept or reject the project. (8 Marks) Assume cash flows of a multinational company as follows: Initial cash outlay of Kshs. 20,000,000. The expected cash inflows associated with the company for the first to the fourth year are Kshs: 3,315,000; 2,295,000; 4,275,000; and 8,315,000 respectively. The salvage value of the project in the fifth year is Kshs. 2,500,000 and the cost of capital is provided as 16%. Required: Determine whether the MNC should accept or reject the project. (8 Marks)

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To determine whether the multinational company MNC should accept or reject the project we will calcu... View the full answer