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Northam industries is expanding its trade into regional NSW and estimates the intial cost to be...

Northam industries is expanding its trade into regional NSW and estimates the intial cost to be $1.71 million. It has forecast net revenues of $770,000, $970,000, and $800,000 at the end of each of the next three years. Given a required rate of return of 10 percent p.a., what is the NPV and the payback period of this project?

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Expert Solution

Solution :

The Net Present Value of the project = $ 392,704.73

= $ 392,705 ( when rounded off to the nearest whole number )

The Payback period of the project is = 1.9691 Years = 1 year 11.63 months

The Discounted Payback period of the project is = 2.3466 years = 2 years 4.16 months

Please find the attached screenshots of the excel sheets containing the detailed calculation for the solution.

jeff jeffy answered 1 year ago
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