Charge Car P/L is considering a project to launch charging stations for electric cars around Australia. The initial investment is expected to be $100,000,000 and the term of the project is 6 years. The required rate of return from the project is 14% p.a. The annual cash flows are outlined in the following table: End of year Year 1 Year 2 Year 3 Year 4 Cash flow p.a. (Sm) 20 22 25 Year 5 Year 6 30 34 37 Based on Charge Car's required rate of return would you recommend proceeding with this investment? Present all calculations to support your answer a. Would you change your opinion if Charge Car's required rate of return increased to 16% pa? Present all calculations to support your answer. b.
Charge Car P/L is considering a project to launch charging stations for electric cars around Australia. The initial investment is expected to be $100,000,000 and the term of the project is 6 years. The required rate of return from the project is 14% p.a. The annual cash flows are outlined in the following table: End of year Year 1 Year 2 Year 3 Year 4 Cash flow p.a. (Sm) 20 22 25 Year 5 Year 6 30 34 37 Based on Charge Car's required rate of return would you recommend proceeding with this investment? Present all calculations to support your answer a. Would you change your opinion if Charge Car's required rate of return increased to 16% pa? Present all calculations to support your answer. b.
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 26P
Related questions
Question
![Charge Car P/L is considering a project to launch charging stations for electric cars around Australia. The
initial investment is expected to be $100,000,000 and the term of the project is 6 years. The required rate of
return from the project is 14% p.a. The annual cash flows are outlined in the following table:
End of year
Year 1
Year 2
Year 3
Year 4
Cash flow p.a. (Sm)
20
22
25
Year 5
Year 6
30
34
37
Based on Charge Car's required rate of return would you recommend proceeding with this
investment? Present all calculations to support your answer
a.
Would you change your opinion if Charge Car's required rate of return increased to 16% pa? Present
all calculations to support your answer.
b.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F04041958-ba12-4071-b7da-c56afaaddae9%2Fd278c803-e3d4-4738-9ce5-2f2260146992%2Fagfmvw_processed.png&w=3840&q=75)
Transcribed Image Text:Charge Car P/L is considering a project to launch charging stations for electric cars around Australia. The
initial investment is expected to be $100,000,000 and the term of the project is 6 years. The required rate of
return from the project is 14% p.a. The annual cash flows are outlined in the following table:
End of year
Year 1
Year 2
Year 3
Year 4
Cash flow p.a. (Sm)
20
22
25
Year 5
Year 6
30
34
37
Based on Charge Car's required rate of return would you recommend proceeding with this
investment? Present all calculations to support your answer
a.
Would you change your opinion if Charge Car's required rate of return increased to 16% pa? Present
all calculations to support your answer.
b.
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