FINANCE TUTORIAL WORK 2.pptx - TUTORIAL WORK 4 GROUP B...

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TUTORIAL WORK 4TUTORIAL WORK 4GROUP B
QUESTION XYZCash Outflow RM20000, WACC= 12%YEAR 1700090007250YEAR 2800050007250YEAR 3500080007250YEAR 4900070007250
SOLUTION OF NPVX = 7000/(1+0.12)^1 + 8000/( 1+0.12)^2 + 5000/(1+0.12)^3 + 9000/(1+0.12) ^4 – 20000= 6250 + 6377.5 + 3558.90 + 5719.66 – 20000= 21906.11 – 20000= 1906.11Y = 9000/(1+0.12)^1 + 5000/(1+0.12)^2 + 8000/(1+0.12)^3 + 7000/(1+0.12)^4 – 20000= 8035.71 + 3985.97 + 5694.24 + 4448.63 – 20000= 22164.55 + 20000= 2164.55Z = 7250/(1+0.12)^1 + 7250/(1+0.12)^2 + 7250/(1+0.12)^3 + 7250/(1+0.12)^4 – 20000= 6473.21 + 5779.66 + 5160.41 + 4607.51 – 20000= 22020.79 – 20000= 2020.79
SOLUTION OF PBP AND DPBPPBPX = 2 + (5000/5000)= 2 + 1= 3 YearsY = 2 + (6000/8000)= 2 + 0.75 = 2.75 YearsZ = 2 + (5500/7250)= 2 + 0.76= 2.76 YearsDPBPX = 3 + (3813.55/5719.66)= 3 + 0.67= 3.67 YearsY = 3 + (2284.08/4448.63)= 3 + 0.51= 3.51 YearsZ = 3 + (2586.72/4607.51)= 3 + 0.56= 3.56 Years
SOLUTION FOR PIPI:X = (6250 + 6377.55 + 3558.90 + 5719.66)/20000= 21906.11/20000= 1.10 timesY = (8035.71 + 3985.97 + 5694.24 + 4448.63)/20000= 22164.55/20000= 1.11 timesZ = (6473.21 + 5779.66 + 5160.41 + 4607.51)/20000= 22020.79/20000= 1.10 times
ANALYSIS AND FINANCIAL DECISION MAKING A.NET PROFIT VALUE (NPV)NPV must be POSITIVE (+), PV of cash inflow is higher than PV of outflow.NPV for Project X = 1906.11Project Y = 2164.55Project Z = 2020.79The HIGHER the value of NPV, the BETTER the performance.Project Y is the best choice for firm to choose as Project X and Z is lower than Project Y.

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