Calculate npv irr payback period for your company

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"When you have the option of deciding when to invest, it is usually optimal to invest when the NPV is substantially greater than zero."

Your Company Plc is considering a new project at a cost of £13 million. The project may begin today or in exactly one year. You expect the project to generate £2,000,000 in free cash flow the first year if you begin the project today. Free cash flow is expected to grow at a rate of 3% per year. The risk-free rate is 4%. The appropriate cost of capital for this investment is 11%. The standard deviation of the project's value is 30%.

Applying suitable model discuss whether you should begin the project today or wait one year?

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The above problem belongs to financial management and the problem explain about calculating NPV, IRR, Payback period, etc for a company.

Reference no: EM13956105

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