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Should avery ltd proceed with the investment

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Reference no: EM133179919

Question - Avery Ltd is considering investing in a project that will cost a total of $480,000 and run for 5 years. The project is expected to return $160,000 per annum and have annual costs of $30,000. At the end of the second year, a further $20,000 will need to be spent to keep the project up to date. The company's cost of capital is 8% and they require the project pays for itself in less than 4 years. Should Avery Ltd proceed with the investment? Would your answer differ if the cost of capital is 10%?

Reference no: EM133179919

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