Harrison Ltd is contemplating a project with these projections:Initial amount invested is R1,400,000 and an...
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Accounting
Harrison Ltd is contemplating a project with these projections:
- Initial amount invested is R1,400,000 and an expected residual value of R120,000.
Year | Cashflows | Discount factor |
Year 1 | R170,000 | 0.909 |
Year 2 | R190,000 | 0.826 |
Year 3 | R200,000 | 0.751 |
Year 4 | R150,000 | 0.683 |
Year 5 | R160,000 | 0.621 |
Cost of capital is 8%. Depreciation is R100,000 per year. Tax rate is 27%.
Required:
- Calculate each of the following:
- 1.8.1 Net Present Value (5)
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