1. Find out the present value of Rs. 10,000 to be required after 4 years if the interest rate is 6%.
2. A Firm can invest Rs. 10,000 in a project with a life of three years.
The projected cash inflow are as follows:
|
Year
|
1
|
2
|
3
|
|
Cash inflows(Rs.)
|
4,000
|
5,000
|
4,000
|
The cost of capital is 10 % p.a. Should the investment be made ?
[ Hint : DCF @ 10%, for 1st year =0.909, for IInd year = 0.826, IIIrd Year = 0.751 ]
Write short notes on the following:
3. IRR
4. Cost of preference Equity