Question

The ESET Company's policy is to only take on projects that will realize an annual rate of return (interest) of at least 10%. Based on this decision criterion, should the company invest in the following project? Project 333 requires an initial investment of $10K, and annual additional investments of $1K for the first three years and $5K in year 4 growing each year by $2K for the next six years (years 5 through 10). With these investments, the project is expected to produce a revenue stream of $5K every year for the first five years and then $10K for years 6 through 10. The cash-out income at the end of ten years will be an additional $25K.

Please do not use Excel. Need to see the actual calculation

Answer 1

Answer: decision is ! Accept the project: inflow I out floco l Pu@10% in ooo ~ 10 1 우 C.Aoii 08264 33 CAS(3 3 이 66830 6. 00 '요 3 4 5 6 고 83 0 6200 1-29 | 0.5645 S in TTF 무 부퓌 OSIA 6 SI 40 4665 613 0 38SS - 12 6194 NPU 1.

Now, we will reject the project when the fiorst five years value is less than 6.93 hewends if feast five years value is less than 6153 thowends then proposal will be negative. Reject the project.