Business finance-2010-11 RA

Business finance-2010-11 RA

Business finance-2010-11 RA

TTs261212_65474_14/TTs261212_65474_14.docx SOLUTION 2: Part b) Basis of advice given in part (a) is that Present value of cash outflows is more than present value of cash inflows, which represents that net present value is negative at the given rate of interest of 18%, i.e. if project is accepted by the company, there will be a loss. Development costs of £ 15 million incurred before starting of the project is not considered because it is a sunk cost.....