Short Sighted Limited is considering to invest in a project which will return cash flows of $10,000 one year from now, $30,000 two years from now and $50,000 three years from now. The initial investment required will be $80,000 today.

a) Determine the NPV of this project if the required rate of return is 12% p.a.

b) Evaluate the IRR of this project based on this $80,000 investment. 

c) Advise Short Sighted Limited whether to accept this project based on NPV calculated in (a) and IRR (as compared to the required rate of return of 12%) calculated.

Answer rating: 100% (QA)

a To determine the NPV of this project we need to discount the cash flows back to the... View the full answer