A financial analyst predicts an investment plan that will require IDR 800 million in funds

Subject:FinancePrice:2.86 Bought9

Share With

A financial analyst predicts an investment plan that will require IDR 800 million in funds. The investment is estimated to have an economic age of 4 years. The estimated profit and loss for each year is as follows:

	1st year and 2nd year	3rd year and 4th year
Sales income	IDR 800000000	IDR 865000000
Costs
Depreciation	IDR 165000000	IDR 165000000
Cash	IDR 100000000	IDR 105000000
Total Cost	IDR 265000000	IDR 270000000
Profit before tax	IDR 535000000	IDR 595000000
Tax (35%)	IDR 187250000	IDR 208250000
Profit after tax	IDR 347750000	IDR 386750000

At the end of the fourth year, it is estimated that a cash inflow terminal of Rp. 100 million will be obtained.

Questions

1). what is the NPV of the investment, if r = 17%?

2). what is the profitability index

3). what is the average rate of return