Project R delegates all the development work to outside companies. The estimated cash flows for Project...

 

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Project R delegates all the development work to outside companies. The estimated cash flows for Project R are (where brackets indicate expenditure): Beginning of Year 1 (£150,000) (contractors' fees) Beginning of Year 2 (£250,000) (contractors' fees) Beginning of Year 3 (£250,000) (contractors' fees) End of Year 3 £1,000,000 (sales) (i) Calculate the net present value for Project R using a discount rate of 20% per annum (ii) Find the internal rate of return for Project R. [15] Project R delegates all the development work to outside companies. The estimated cash flows for Project R are (where brackets indicate expenditure): Beginning of Year 1 (£150,000) (contractors' fees) Beginning of Year 2 (£250,000) (contractors' fees) Beginning of Year 3 (£250,000) (contractors' fees) End of Year 3 £1,000,000 (sales) (i) Calculate the net present value for Project R using a discount rate of 20% per annum (ii) Find the internal rate of return for Project R. [15]

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To calculate the net present value NPV and internal rate of return IRR for Project R we need to disc... View the full answer