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Question: you have the opportunity to invest in a project with...

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You have the opportunity to invest in a project with the following cash flows?

 

Initial investment/Outlay today: $11,000.

Cashflow back to you in 1 year $6000

Cashflow back to you in 2 years $5000

Scrap Value in 2 years $500

Assume interest rates are 5% in the 1 year and 7% in the 2 year. (tip: use the spreadsheet NPV from Moodle to helpin your calculations)

 

a. Calculate the NPV of the project (show formula/workings)?
b. Should you invest in this project? Why?
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