Homework Answers
| 1 | Net Present Value | = | $ 2,33,476 | ||
| 2 | IRR is higher than 12% (As NPV is positive at 12% Cost of capital) | ||||
| Workings: | |||||
| 1 | Year | Value Flows | Present Factor @ 12% | Present Value | |
| Initial Cost | 0 | $ -38,00,000 | 1 | $ -38,00,000 | |
| Cost Savings | 1 - 20 | $ 5,40,000 | 7.4694 | $ 40,33,476 | |
| Net Present Value | $ 2,33,476 | ||||
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