Vazeer hydraulics limited is considering an investment proposal involving an outlay of Rs, 45,00,000. The expected cash flows and certainty equivalent coefficients are: The rise-free interest rate is 5 percent. Calculate the net present value of the proposal. Year Expected Cash flow Certainty Equivalent co-efficient 1 Rs 1,000,000 0.90 2 Rs 1,500,000 0.85 3 Rs 2,000,000 0.82 4 Rs 2,500,000 0.78

Vazeer hydraulics limited is considering an investment proposal involving an outlay of Rs, 45,00,000. The expected cash flows and certainty equivalent coefficients are: The rise-free interest rate is 5 percent. Calculate the net present value of the proposal. Year Expected Cash flow Certainty Equivalent co-efficient 1 Rs 1,000,000 0.90 2 Rs 1,500,000 0.85 3 Rs 2,000,000 0.82 4 Rs 2,500,000 0.78

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

Problem 1PS

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Hello Mitty Ltd is considering a project MEA as shown below. The estimated cash flows for this project is as follows: Project MEA £000 Investment (immediate cash outflow) 70 Net annual cash inflows: Year 1 40 Year 2 45 The business’s cost of finance is estimate at 12 per cent. Calculate: a) The net present value for project MEA. b) The approximate internal rate of return for project MEA.
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