Calculate the Net Present Value of this project

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Reference no: EM133128797

Question - Supertest Pty Ltd consider to invest in new project to manufactures the Rapid Test kit that can detect Covid 19 within 1 minute, the total cost for the project at the beginning of the project will be $5,000,000 to bring in the project to live. However it will bring an additional net cash flow for the next 5 years before it has to be scrapped with $0 value as follow:

Year 0 (5,000,000)

Year 1 2,400,000

Year 2 1,850,000

Year 3 1,200,000

Year 4 850,000

Year 5 600,000

Required - Please calculate the following:

1. Calculate the Net Present Value (NPV) of the project at a discount rate of 14%.

2. Calculate the Net Present Value (NPV) of the project at a discount rate of 17%.

3. Calculate the Payback Period.

4. Prove it whether the IRR (Internal Rate of Return) is 15.64%.

5. Please give your advise whether we should go ahead with this project if the minimum required rate of retune is 16%.

Reference no: EM133128797

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