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What is the NPV and Profitability index of a projext with a net investment of $20,000 and expected net cash flow of $3000 a year for 10 yrs if the projects required return is 12%. Is this project acceptable?

jamesjarmon Sun 20/07/08 20:46

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factor30
Sun 20/07/08
21:15

Assuming each year's income is received at the year end the NPV is -£3,049. I have arrived using 12% as the discount rate.
If the income is received at start of each year then teh NPV is -£1,015
Either way, the NPV is negative so in financial terms it is not acceptable.

Not sure how you measure proftability index- it could be teh ratio of NPB of profit to initial outlay

factor30
Fri 01/08/08
16:00

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