Question: QUESTION 4 [6 MARKS] A project requires an initial investment of P500,000. The following cash flows have been estimated for the life of the project:

QUESTION 4 [6 MARKS]

A project requires an initial investment of P500,000. The following cash flows have been

estimated for the life of the project:

Year Cash flow (P)

1 120,000

2 150 000

3 180 000

4 160 000

a. The company uses NPV to appraise projects. Using a discount rate of 7%, calculate the NPV

of the project and recommend whether the project should be undertaken. (6 marks)

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