Economics Coursework: Comparison of two Companies Financial Statements (Coursework Sample)

The time adjusted or discounted rate of return is the I.R.R of the project. Discount the cash flows at 12.5% cost of capital given by:
Recall discounting factor (PVIF) =
When it comes to assessing the future value of investments, it is common to use the weighted average cost of capital (WACC) as the discount rate.
YEAR

CASHFLOWS ($)”000”

PVIF@12.5%

PRESENT VALUE ($)”000”


1

575

0.8889

511.1175


2

625

0.7901

493.8125


3

750

0.7023

526.725