Question 3 3· value 8.37 points Siemens AG invests 80,000,000 to build a manufac

Question

Question 3 3· value 8.37 points Siemens AG invests 80,000,000 to build a manufacturing plant to build wind turbines. The company predicts net cash flows of €16.000.000 per year for the next 8 years Assume the company requires an 8% rate of return from its investments. (PV of $1. FV of $1. PVA of $1 and FVA of $1) (Use appropriate factorfs) from the tables provided.) (1) what the payback penod of this mestment? Payback period Annuai net cash flowPayback period 5.00 years 80,000,000E 160000001 = (2) What is the net present value of this investment? Present value of cash inflows Less Amount to be invested Net present value of investment

Explanation / Answer

2)Present value of cash flow =PVA8%,8*CF

    = 5.74664*16,000,000

   = $ 91,946,240

Less:Amount invested -80,000,000

NPV =11,946,240

**PVA from table at 8% for 8years

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