Mojela, a movie producer, and director at Mzansi Studios is considering investing R12 000 in an AI project to improve the creative and writing skills of his team. The Department of trade and Industry has agreed to finance the project if Mojela pays upfront R5 000 into the project. The project will generate the following cash flows: YEAR REVENUES R EXPENSES 1 20 000 18 000 2 22 000 19 000 3 22 000 20 000 4 22 000 17 000 5 25 000 17 000 Mojela requires a minimum rate of return of 8%. Required: 1.1. Calculate the net present value of the investment? Would you recommend that Mojela continue with this project? Substantiate your answer. (7) 1.2. Determine the project’s payback period? (3) 1.3. Distinguish between the NPV method and payback period.
Mojela, a movie producer, and director at Mzansi Studios is considering investing R12 000 in an
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