Consider a project costing S$15,000 today and delivering net free cash flows of S$5,000, S$10,000,...
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Finance
Consider a project costing S$15,000 today and delivering net free cash flows of S$5,000, S$10,000, S$4,000, S$ over the next 3 years (starting next year). The cost of capital of the firm is 11.5% and its management usually wants to recuperate its investment within 2 years. It is anticipated that after 3 years, the project would be discontinued. The investment would then be fully amortized and discarded without value. Perform the appropriate computation and tick the result to assess whether the investment creates shareholders value and should therefore be launched.
Choose One Answer:
S$15,413.5
S$19,000
S$413.5
2.58 years
1.88 years
S$4,000
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