Calculate the Net Present Value for a project whose cost of capital is 15% and initial after-tax cost is RM5,000,000 and is expected to provide after-tax operating cash inflows of RM1,800,000 in year 1, RM1,900,000 in year 2, RM1,700,000 in year 3, and RM1,300,000 in year 4. Tangshan Mining Company is considering investing in a new mining project. The firm's cost of capital is 12 % and the project is expected to have an initial after-tax cost of RM5,000,000. Furthermore, the project is expected to provide after-tax operating cash flows of RM2,500,000 in year 1, RM2,300,000 in year 2, RM2,200,000 in year 3, and (RM1,300,000) in year 4. (i) Calculate the project's Net Present Value. (ii) Calculate the project's Internal Rate of Return. (iii) Decide whether the firm should invest or not.

Calculate the Net Present Value for a project whose cost of capital is 15% and initial after-tax cost is RM5,000,000 and is expected to provide after-tax operating cash inflows of RM1,800,000 in year 1, RM1,900,000 in year 2, RM1,700,000 in year 3, and RM1,300,000 in year 4. Tangshan Mining Company is considering investing in a new mining project. The firm's cost of capital is 12 % and the project is expected to have an initial after-tax cost of RM5,000,000. Furthermore, the project is expected to provide after-tax operating cash flows of RM2,500,000 in year 1, RM2,300,000 in year 2, RM2,200,000 in year 3, and (RM1,300,000) in year 4. (i) Calculate the project's Net Present Value. (ii) Calculate the project's Internal Rate of Return. (iii) Decide whether the firm should invest or not.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 2PA: Jasmine Manufacturing is considering a project that will require an initial investment of $52,000...

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