Charge car required rate of return

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Reference no: EM132622833

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
20m
Year 2
22m
Year 3
25m
Year 4
30m
Year 5
34m
Year 6
37m

a. Based on Charge Car's 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 16% pa? Present all calculations to support your answer.

Reference no: EM132622833

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