MNB2601-25-S1
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The company intends to invest in a business improvement for Project ZS with an initial cost of R4 500; the required return rate is 11% and the payback period is four years.
The projected net annual cash flows for the project are as follows:
Project ZS
| |
Year 0
|
-4 500
|
Year 1
|
3 300
|
Year 2
|
3 000
|
Year 3
|
3 900
|
Year 4
|
3 500
|
What is the net present value of the proposed project?
Consider the information given below to answer the question that follows.
MFM Manufacturers is considering making an investment in a business improvement project with the following probability and expected rate of return:
The probability and expected rate of return of the MFM Manufacturers' business improvement project
State of the economy
|
Probability
|
Project return
|
Extraordinary boom
|
30%
|
50%
|
Boom
|
25%
|
35%
|
Normal
|
20%
|
15%
|
Recession
|
15%
|
-10%
|
Depression
|
10%
|
-25%
|
|
100%
|
|
The variance of the return on this project is .
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