question archive Sydney Printer Ltd is attempting to evaluate the feasibility of investing $200,000 in a new printing machine with a five-year life
Sydney Printer Ltd is attempting to evaluate the feasibility of investing $200,000 in a new printing machine with a five-year life
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Sydney Printer Ltd is attempting to evaluate the feasibility of investing $200,000 in a new printing machine with a five-year life. The company has estimated the cash inflows associated with the proposal as shown below. The company has 10% cost of capital.
Year
Cash Inflows
1
$30,000
2
$55,000
3
$53,500
4
$61,500
5
$51,000
Required:
a. Calculate the payback period for the proposed investment. (4 marks)
b. Calculate the discounted payback period for the proposed investment. (2 marks)
c. Calculate the NPV for the proposed investment. (7 marks)
d. Would you, as a financial advisor opt for this investment? Why? Why Not? (2 marks)
