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Project 1 (half a mark for each part: You must show your working to receive full marks) Polycorp
is considering an investment in new plant of $3 million. The project will be financed with a loan
of $2,000,000 which will be repaid over the next five years in equal annual end of year
installments at a rate if 9.5 percent pa. Assume straight-line depreciation over a five-year life,
and no taxes. The projects cash flows before loan repayments and interest have been deducted
are shown in the table below. Cost of capital is 14.5% pa (the required rate of return on the
project).A salvage value of $200,000 is expected at the end of year five and is not included in
the cash flows for year five below. Ignore taxes and inflation.
ANSWER
https://solvedquest.com/project-1-half-a-mark-for-each-part-you-must/