What is the initial investment? Aakanksha What is the initial investment?2013-01-17T08:48:40+00:00 › Forums › Homework Help › What is the initial investment? Tagged: marketing assignment help This topic contains 0 replies, has 1 voice, and was last updated by Aakanksha 6 years, 6 months ago. Viewing 1 post (of 1 total) Author Posts January 17, 2013 at 8:48 am #8545 AakankshaParticipant A company is studying the feasibility of acquiring a new machine. This machine will cost R350, 000 and have a useful life of three years after which it will have no salvage value. It is estimated that the machine will generate operating revenues of R240, 000 and incur R75, 000 in annual operating expenses over the useful life of three years. The project requires an initial investment of R15, 000 in working capital which will be recovered at the end of the three years. The firmÃ¢â‚¬â„¢s cost of capital is 16%. You are required to use the NPV method to determine if the company should acquire the machine. You may ignore depreciation and tax. Answer all the questions. What is the initial investment? (1) b) What is the initial Net Working Capital? c) What is the annual operating cash flow? d) What discount rate will you use? e) What is the discount factor for years 1 to 3 of operation? Give the factor to four decimal places. f) What is the salvage value at the end of the third year? g) What is the present value of the cash flows in Year 0? h) What is the present value of the cash flows in Year 1? i) What is the present value of the cash flows in Year 2? j) What is the present value of the cash flows in Year 3? k) What is the net present value of the project? l) Should the company acquire the machine? Author Posts Viewing 1 post (of 1 total) You must be logged in to reply to this topic.