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(Solved): Your grandma has set up a fund of $1,000,000 for you. You have to invest this money in a fixed asset ...
Your grandma has set up a fund of $1,000,000 for you. You have to invest this money in a fixed asset project. As a result of your feasibility study, you predict the following cash flow for the next 5 years:
? Years Cash flows DF (10%)
1 250,000 0.909
2 280,000 0.826
3 300,000 0.751
4 300,000 0.683
5 300,000 0.621
Scrap value of the project is expected to be $400,000 assuming WACC is 10%;
a) Calculate the project's IRR and discounted payback period.
b) Briefly state the selected location, which sector you chose, and why.