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  • BAE

Net present value of the proposed project


i. Calculate the net present value of the proposed project.

ii. Calculate the internal rate of return for the proposed project hint: Use 13% and 16% to compute the internal rate of return.

iii. The board of directors have never been on a finance course and do not understand any of the finance jargon. However, they have asked you to persuade them that the appraisal method you have used in (i) above can be relied on.

Prepare a presentation for the board of directors explaining the reasoning and justification for using your chosen project appraisal technique and your treatment of specific items in the accounts. You will need to explain concepts such as the time value of money, opportunity cost and sunk cost in plain English

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