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Calculate the NPV of this investment

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Question - Let us consider an investment with an initial outlay of 20,000 EUR. This asset has a life of five years, a salvage value of 1,000 EUR at the end of five years and the following estimates of annual net after-tax revenue: $3,000 in year 1, $5,000 in year 2, $4,000 in year 3, 8,000 in year 4 and $10,000 in year 5. The required rate of return of the investor is 10 percent.

a) Calculate the NPV of this investment. Is this project profitable?

b) Determine the undiscounted and the discounted pay-back period.

Reference no: EM132817483

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