A company intends to invest Rs 3 million into a project which would yield 10,15 and 20 percent during the first three years respectively. The company would also recover the original investment after 3 years. If the company’s cost of capital is 12%, the NPV of the project
would be:
a) Rs 1,350,000 (b) Rs 168,754
c) Rs (39,783) (d) Rs 189,003

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The correct option is (d) Rs 189,003.

Step-by-step explanation:

Note: See the attached excel file for the calculation of the NPV of the project.

In the attached excel file, the following are used:

Original investment = Rs 3,000,000

Year 1 Income = Original investment * 10% = Rs 3,000,000 * 10% = Rs 300,000

Year 2 Income = Original investment * 15% = Rs 3,000,000 * 15% = Rs 450,000

Year 2 Income = Original investment * 20% = Rs 3,000,000 * 20% = Rs 600,000

In addition, we also use:

Discounting factor = 1 / (1 + r)^n (1)

Where;

r = Company’s cost of capital = 12%, or 0.12

n = each relevant year 1, 2, or 3.

Substituting the values into equation (1), we have:

Discounting factor = 1 / (1 + 0.12)^n

From the attached excel file, the NPV of the project is Rs 189,003.

Therefore, the correct option is (d) Rs 189,003.

the answer is 200

step-by-step explanation:

the way the question is worded, it seems to imply the $264 interest is simple interest, not compound interest.

the simple interest for 2 years is $264; the simple interest for 1 year is $132.

$132 interest on a $600 investment means an interest rate of (132/600)*100 = 22%.

the value of $200 at 22% interest compounded annually for three years is

200%281.22%29%5e3

the amount of interest is that value, minus the original $200.

idk

step-by-step explanation: