ECN606 4. Cost Benefit Analysis A project has an initial cost of £1,000 and yields benefit of £300 for 5 years. It then has a cost of £300 in year 6 (a decommissioning cost). (i) Should the project be implemented if the discount rate is 5%? (use two decimal points in your calculations) (ii) Can the decommissioning cost affect the net present value (NPV), and hence the decision to implement the project?
ECN606 4. Cost Benefit Analysis A project has an initial cost of £1,000 and yields benefit of £300 for 5 years. It then has a cost of £300 in year 6 (a decommissioning cost). (i) Should the project be implemented if the discount rate is 5%? (use two decimal points in your calculations) (ii) Can the decommissioning cost affect the net present value (NPV), and hence the decision to implement the project?
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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Transcribed Image Text:ECN606
4. Cost Benefit Analysis
A project has an initial cost of £1,000 and yields benefit of £300 for 5 years. It then
has a cost of £300 in year 6 (a decommissioning cost).
(i) Should the project be implemented if the discount rate is 5%? (use two decimal
points in your calculations)
(ii) Can the decommissioning cost affect the net present value (NPV), and hence
the decision to implement the project?
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