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capital+budgeting-11

# capital+budgeting-11 - Answer Calculation of NPV year 1 2 3...

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Answer Calculation of NPV WACC 14% project A Project B year 1 2000 0.88 1754 5600 4911.2 2 2000 0.77 1538 5600 4306.4 3 2000 0.68 1350 5600 3780 4 2000 0.59 1184 5600 3315.2 5 2000 0.52 1038 5600 2906.4 10000 6864 28000 19219.2 cost 6000 18000 NPV 864 1219.2 PROJECT B SHOULD BE SELECTED AS IT HAS HIGH NPV PAY BACK PERIOD=COST OF THE PROJECT/ANNUAL CASH INFLOW ANNUAL CASH INFLOW PROJECT A 2000 PROJECT B 5600 PAY BACK PERIOD PROJECT A 3.00 PROJECT B 3.21 PROJECT A SHOULD BE SELECTED AS IT HA DISCOUNTED PAY BACK METHOD project A Project B year DISCOUNTED CASH INFLOW CUMULATIVE CASH INFLOW 1 1754 1754.00 4911.2 2 1538 3292.00 4306.4 3 1350 4642.00 3780 4 1184 5826.00 174.00 3315.2 5 1038 6864.00 0.17 2906.4 DISCOUNTED PAY BACK METHOD 4 AND .167 YEARS IRR IF DISCOUNT RATE: 20% year project A Project B 1 2000 0.83 1666 5600 4664.8 2 2000 0.69 1388 5600 3886.4 3 2000 0.58 1158 5600 3242.4 4 2000 0.48 964 5600 2699.2 5 2000 0.4 804 5600 2251.2 5980 16744 cost 6000 18000 NPV -20 -1256 844 -36.8 884 2475.2

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0.95 -0.01 5.73 -0.09 IRR 19.73 14.09 PROJECT A SHOULD BE SELECTED AS IT HAS HIGH IRR MIRR year FUTURE VALUE OF INFLOW AT 14% 1 2000 1.140 2280 5600 6384 2 2000 1.300 2600 5600 7280 3 2000 1.482 2964 5600 8299.2 4 2000 1.689 3378 5600 9458.4 5 2000 1.925 3850 5600 10780 TERMINAL VALUE 15072 42201.6 PRESENT VALUE OF INFLOW AT 10% 0.62 0.62 PRESENT VALUE OF TERMINAL VALUE 9359.71 26207.19 LESS;COST 6000 18000 3359.71 8207.19 PRESENT VALUE OF INFLOW AT 25% 0.33 0.33
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capital+budgeting-11 - Answer Calculation of NPV year 1 2 3...

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