Answer to Question #98330 in Financial Math for Dee

Question

A company is considering investing in a project. The project requires an initial investment
of three payments, each of RM105,000. The first is due at the start of the project, the
second six months later, and the third payment is due one year after the start of the
project.
After 15 years, it is assumed that a major refurbishment of the infrastructure will be
required, costing RM200,000. The project is expected to provide a continuous income
stream as follows:
• RM20,000 in the second year
• RM23,000 in the third year
• RM26,000 in the fourth year
• RM29,000 in the fifth year
Thereafter the continuous income stream is expected to increase by 3% per annum
(compound) at the start of each year. The income stream is expected to cease at the end of
the 30th year from the start of the project. Find the net present value of the project at a
rate of interest of 8% per annum effective (to the nearest RM1,000).

Answer 1

Dear Dee, your question requires a lot of work, which neither of our experts is ready to perform for free. We advise you to convert it to a fully qualified order and we will try to help you. Please click the link below to proceed: Submit order