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Calculate the net present value of the project

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Question - Tsumeb Municipality is considering investing in new energy saving units at a total cost of N$ 3 million. The units are expected to result in energy cost savings of N$ 500 000 per year. The economic life of the units is expected to be 8 years. The required return is 5%. There is no taxation.

Required -

a) Calculate the net present value (NPV) of the project.

b) Calculate the internal rate of return (IRR) of the project.

c) Calculate the modified internal rate of return (MIRR).

d) Calculate the payback period of the project.

e) Calculate the profitability index of the project (PI).

f) Based on your calculations on a) to e) above, would you recommend the project or not?

Reference no: EM132618691

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