Time Value of Money Illustration 7


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Mr. Parekh has invested  50,000 on Xerox Machine on 1st Jan 2012. He estimates net cash income from Xerox Machine in next 5 years as under.

 

Year Estimated Inflows
2012

2013

2014

2015

2016

12,000

15,000

18,000

25,000

30,000

At the end of fifth year, machine will be sold at scrap value of  5,000. In addition to investment, working capital is  10,000. Advice him whether his project is viable, considering interest rate of 10% p.a.


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