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Calculate the net present value of a software update project

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Reference no: EM132861822

Question - In order to "sell" your current and future projects, you will need to perform basic cost-benefit analyses. If you would like for partial credit to be considered, please show your work where necessary.

a) Calculate the net present value of a software update project which requires an initial investment of $900,000 (Year 0) and is expected to generate cash inflow of $500,000 each year for years 1-4. Assume that the salvage value of the project is zero. The target rate of return is 4% per annum. Be sure to use time adjustments.

b) During which year will the project achieve its payback period (accounting for time adjustments)?

c) What is the cost-benefit ratio?

Reference no: EM132861822

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