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Calculate the total cash receipts from the project

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Question - Project DEF is a three-year project which has an initial cost of $6,000,000 with depreciation of $2,000,000 p.a. and a scrap value at the end of the project of nil.

The average cost of capital is 9% p.a.

The net profit after tax for the project for each of the 3 years is expected to be:

Year 1: $2,000,000

Year 2: $3,000,000

Year 3: $4,000,000

Required -

(a) Accounting Rate of Return on original investment.

(b) Calculate the total cash receipts from the project.

(c) The Payback Period.

(d) Internal Rate of Return.

(e) Net Present Value.

Reference no: EM132904115

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