Investment analysis Assignment 7
Zanpanzar Ltd. is considering investing in a new machine that can produce widgets. They can
buy the machine for €18.000. During the next four years they estimate that producing and
selling the widgets will result in an operating profit of €1.500 per year. After four years they
intend to sell the machine for €6.000. Zanpanzar uses the straight-line method for
depreciation. The discount rate is 10%.
Required:
Calculate the Payback Period and the Net Present Value for this investment.
Zanpanzar Ltd. is considering investing in a new machine that can produce widgets. They can
buy the machine for €18.000. During the next four years they estimate that producing and
selling the widgets will result in an operating profit of €1.500 per year. After four years they
intend to sell the machine for €6.000. Zanpanzar uses the straight-line method for
depreciation. The discount rate is 10%.
Required:
Calculate the Payback Period and the Net Present Value for this investment.
