Calculate the net present value of project two

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Reference no: EM132632234

Rocky Crest Project Development Ltd ("RCPD") is a Namibian company that earns revenue from undertaking various projects. Currently the company is assessing the viability of three projects that have been presented to them. The three project have the following details:

                                               Project 1                Project 2                  Project 3

                                               (N$000)                     (N$000)                 (N$000)

Initial investment                           400                    450                   350

Incremental profits:

Year 1                                            20                      40                      (20)

Year 2                                             40                        40                      40

Year 3                                                60                         40                  60

Year 4                                                  40                          40                80

Year 5                                                   20                            40                   30

It is company policy to depreciate non-current assets using the straight line method. The company's cost of capital is 10%

Question 1: Calculate the net present value of project 2

Reference no: EM132632234

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