Question: ( i ) . Consider a ten - year project that costs $ 4 , 0 0 0 , 0 0 0 today, which is

(i). Consider a ten-year project that costs $4,000,000 today, which is expected to generate $600,000 at the end of the second year and then the cash flows will increase by $100,000 for three years and then stagnate for the rest of the project life. The cost of capital is 8 percent. What is the projects NPV? What is the discounted payback period? (5 marks)

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