1. A project will cost £500,000. Its benefits are estimated to be £50,000 and maintenance cost is £5000 pa. The project's life is planned for 15 years and its scrap value will be £15,000. At a discount rate of 8% what is the equivalent annual value (EAV) to the nearest £10?
How does opportunity cost affect an investor's required rate of return?
2. A project has a profitability index of 2.2 and initial investment of 480000. What is th NPV of the project?