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Table of discounting factors

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Marclaren a long term investor is considering if he can invest in an investment project with an initial cost of £550,000 and an estimated revenue return of £150,000 per annum for 5 years.He uses the following table of discounting factors:

                          Discounting factor

Year 1                        0.901

Year 2                        0.812

Year 3                        0.731

Year 4                        0.659

Year 5                       0.593

Q1. Calculate the net present value of the project.

Q2. Advise him whether the project is a worth while investment at the discount rate used.

Q3. Calculate the discount rate used.

Q4. Explain what the net present value calculated in (a) represents.

Reference no: EM131076253

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