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Study the information below and answer the questions that follow: Information Zakiv Limited is considering investing in a...

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Finance

Study the information below and answer the questions thatfollow:


Information
Zakiv Limited is considering investing in a project. The followinginformation/data is available
for the project:

Annual profits (loss): R

R

Year 1

(38 000)

Year 2

40 000

Year 3

(7 000)

Year 4

25 000

Year 5

34 000

Initial Cash Investment

300 000

Expected useful life 5 years

5 years

Scrap Value

20 000

The company estimates that its cost of capital is 10%.
Required:
3.1 Calculate the Accounting Rate of Return for the project.
3.2 Calculate the Net Present Value for the project.

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