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Calculate the NPV of Zeus Electronics

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Q1. Percy has been asked by his manager to perform an analysis of some business ventures. The first, Zeus Electronics, will cost $400,000 today and another $100,000 in one years' time, after which the project is expected to generate income of $100,000 every year. Percy knows that his company's required rate of return for such projects is 10% per annum effective. Calculate the NPV of Zeus Electronics.

Q2. Percy's second potential business venture, Poseidon Shipping, will cost three annual payments of $200,000 starting today (at t = 0, 1, and 2). The first positive cash flow of $150,000 is expected to be paid three years from now (t=3). This cash flow will continue to be paid annually forever. Percy knows that his company's required rate of return for such projects is 10% per annum effective. Calculate the NPV of Poseidon Shipping?

Reference no: EM132938399

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