Google Inc is considering investing in a data center project with the following forecasted details:Â Initial...
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Accounting
Google Inc is considering investing in a data center project with the following forecasted details:Â Initial amount invested is R700,000 and expected residual value is R60,000.
Year | Cashflows | Discount factor |
Year 1 | R150,000 | 0.909 |
Year 2 | R160,000 | 0.826 |
Year 3 | R170,000 | 0.751 |
Year 4 | R180,000 | 0.683 |
Year 5 | R190,000 | 0.621 |
Assuming that the cost of capital for the company is 9%. The cash flows are after tax and depreciation is charged at R70,000 per year. Tax rate is 27%.
Required:
- Calculate each of the following: 1.1.1. Net Present Value (NPV) (10) 1.1.2. Payback period (5)
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