question archive Your grandmother, who recently passed away, left you a legacy of $ 1,000,000 and advised you to make an industrial investment with her desire
Your grandmother, who recently passed away, left you a legacy of $ 1,000,000 and advised you to make an industrial investment with her desire
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Your grandmother, who recently passed away, left you a legacy of $ 1,000,000 and advised you to make an industrial investment with her desire. Upon this, as a result of your feasibility study, you have determined that the XYZ investment is suitable; because you will also be able to benefit from government incentives. The feasibility study has also shown that your project, with an economic life of 5 years, provides $ 200,000, 250,000, 350,000, 450,000 and $ 400,000 cash flows annually and a scrap value of $ 200,000 at the end of its economic life. Assuming the required rate of return is 10%, calculate the discounted payback period and internal rate of return of your project Before starting the calculation, briefly summarize in a few sentences in which industry and where you make the investment and why you prefer this sector. Use the discount factors cash-flow and clearly show your transactions.
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I may be making an investment withinside the diversified portfolio with the intention to provide withrange of equities and debt units and I may be looking to offer with the long-time period funding securities in conjunction with debt units which can be Government Bonds and different company bonds with the intention to provide with a higher hazard praise state of affairs and better fee of go back with the aid of using removal of hazard to a big extent.
Discounted payback length may be the length wherein the preliminary funding may be recovered.
Investment with the intention to be recovered in first four years= (200000/1.1)+(250000/(1.1)^2+(350000/1.1)^3+(450000/(1.1)^four)= 9,58,746.
Discounted payback length may be= four+(1000000-958746)/(400000/1.1)^5)= four.17 years.
Hence, the discounted payback length is four.17 years.
