Charge car required rate of return

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Charge car P/L is considering a project to launch charging stations for electric cars around Australia. The initial investment is expected to be $100,000,000 and the term of the project is 6 years. The required rate of return from the project is 14% p.a. The annual cash flows are outlined in the following table:

End of Year Cash flow p.a ($m)

Year 1 20

Year 2 22

Year 3 25

Year 4 30

Year 5 34

Year 6 37

a.Based on Charge's car required rate of return would you recommend proceeding with this investment ? Present all calculations to support your answer.

b. Would you change your opinion if Charge car's required rate of return increased to 6% pa? Present all calculations to support your answer.

Show all the formulas and calculations step by step

Reference no: EM132621916

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