PMP575_Patel_NumericProblems

# PMP575_Patel_NumericProblems - NiraliPatel March 9/2010...

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March  9 / 2010 Proble m  3: Initial Investments  =(75000) Cashflow Required  rate  of return  k= 0.2 Year (1+k)   t   1 \$20000 (1+0.2) 1   =1.20 2 \$25000 (1+0.2) 2   =1.44 3 \$30000 (1+0.2) 3   =1.72 4 \$50000 (1+0.2) =2.07 n NPV (project) = A 0 + ∑ [F t /(1+k) t ] t=1 Where, A 0 =Initial cash investment F t =the cash flow in time period t (negative for outflows) k=the required rate of return t=the number of years of life = (75000) * + [ {20,000 / (1+0.2) 1 } + {25,000/ (1+0.2) 2 } + {30,000/ (1+0.2) 3 } + {50,000/ (1+0.2) 4 } ] = (75000) * + {16,666.67 + 17361.11+ 17361.11+ 24112.65} = 501.534 * Note: The value in parenthesis means its negative Proble m  6:  Year Most  likely (1+k)   t   1 20000 (1+0.2) 1   =1.20 2 25000 (1+0.2) 2   =1.44 3 30000 (1+0.2) 3   =1.72 4 35000 (1+0.2) =2.07                               n NPV (project) = A 0 + [F t /(1+k) t ] t=1 Where, A 0 =Initial cash investment F t =the cash flow in time period t (negative for outflows)

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PMP575_Patel_NumericProblems - NiraliPatel March 9/2010...

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