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5.1 Revision Exercise 1 Smart Centre Smart Centre Ltd can invest in a project with the following estimated future cash flows: R'000 Year 1 R2 400 Year 2 R3 000 Year 3 R4 000 Year 4 R3 200 Year 5 R1 800 The cost of the project is R8m. Ignore taxation. The company's required rate of return (cost of capital) is 14%. The project has a zero-residual value. Calculate the following for the project: 1. Payback period; 2. Net present value.

5.1 Revision Exercise 1 Smart Centre Smart Centre Ltd can invest in a project with the following estimated future cash flows: R'000 Year 1 R2 400 Year 2 R3 000 Year 3 R4 000 Year 4 R3 200 Year 5 R1 800 The cost of the project is R8m. Ignore taxation. The company's required rate of return (cost of capital) is 14%. The project has a zero-residual value. Calculate the following for the project: 1. Payback period; 2. Net present value.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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5.1 Revision Exercise 1 Smart Centre Smart Centre Ltd can invest in a project with the following estimated future cash flows: R'000 Year 1 R2 400 Year 2 R3 000 Year 3 R4 000 Year 4 R3 200 Year 5 R1 800 The cost of the project is R8m. Ignore taxation. The company's required rate of return (cost of capital) is 14%. The project has a zero-residual value. Calculate the following for the project: 1. Payback period; 2. Net present value.
Transcribed Image Text:5.1 Revision Exercise 1 Smart Centre Smart Centre Ltd can invest in a project with the following estimated future cash flows: R'000 Year 1 R2 400 Year 2 R3 000 Year 3 R4 000 Year 4 R3 200 Year 5 R1 800 The cost of the project is R8m. Ignore taxation. The company's required rate of return (cost of capital) is 14%. The project has a zero-residual value. Calculate the following for the project: 1. Payback period; 2. Net present value.
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