Cf Assignment Answer.xlsx
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- Words: 320
- Pages: 5
Pay Back Calculation Project A Year
Expected Cash flows ($) 0 1 2 3 4 5
-1000000 40000 200000 500000 1000000 1300000
Cummulative Inflows ($) 40000 240000 740000 1740000 3040000
Pay back
0.26
3.26 Years
Discounted Pay Back Calculation Project A Year
Expected Cash flows ($) 0 1 2 3 4 5
Discounted Rate 20%
-1000000 40000 200000 500000 1000000 1300000
Discounted Flows ($)
0.83 0.69 0.58 0.48 0.40
Discounted Pay back
33,333.33 138,888.89 289,351.85 482,253.09 522,440.84
4.11 Years
Net Present Value Calculation Project A Year
Expected Cash flows ($) 0 1 2 3 4 5
Discounted Rate 20%
-1000000 40000 200000 500000 1000000 1300000
0.83 0.69 0.58 0.48 0.40 NPV ($)
IRR Project Selection Criteria:
32.56%
Discounted Flows ($) 33,333.33 138,888.89 289,351.85 482,253.09 522,440.84 1,466,268.00 466,268.00
Cummulative Discounted Flows ($) 33,333.33 172,222.22 461,574.07 943,827.16 1,466,268.00
Criteria Pay Back Years
Project A 3.26
Project B 1.25
Discounted Pay Back Years
4.11
1.66
466268
704295.27
32.56
60.52
Net Present Value NPV ($) Internal Rate of Return IRR %
Conclusion: On above criteria Project B will recommended to start a Business as it has lesser pay back period, Higher NPV and
Project B Year
Expected Cash flows ($) 0 1 2 3 4 5
Cummulative Inflows ($)
-900000 750000 600000 500000 400000 200000
750000 1350000 1850000 2250000 2450000
Payback
0.25
1.25 Years
Project B Year
Expected Cash flows ($) 0 1 2 3 4 5
0.11
Discounted Rate 20%
-900000 750000 600000 500000 400000 200000
Cummulative Discounted Flows Discounted Flows ($) ($)
0.83 0.69 0.58 0.48 0.40
Discounted Pay back
625,000.00 416,666.67 289,351.85 192,901.23 80,375.51
1.66 Years
Project B Year
Expected Cash flows ($) 0 1 2 3 4 5
Discounted Rate 20%
-900000 750000 600000 500000 400000 200000
0.83 0.69 0.58 0.48 0.40 NPV ($)
IRR
60.52%
Discounted Flows ($) 625,000.00 416,666.67 289,351.85 192,901.23 80,375.51 1,604,295.27 704,295.27
625,000.00 1,041,666.67 1,331,018.52 1,523,919.75 1,604,295.27
pay back period, Higher NPV and Higher IRR.
0.66
Expected Cash flows ($) 0 1 2 3 4 5
-1000000 40000 200000 500000 1000000 1300000
Cummulative Inflows ($) 40000 240000 740000 1740000 3040000
Pay back
0.26
3.26 Years
Discounted Pay Back Calculation Project A Year
Expected Cash flows ($) 0 1 2 3 4 5
Discounted Rate 20%
-1000000 40000 200000 500000 1000000 1300000
Discounted Flows ($)
0.83 0.69 0.58 0.48 0.40
Discounted Pay back
33,333.33 138,888.89 289,351.85 482,253.09 522,440.84
4.11 Years
Net Present Value Calculation Project A Year
Expected Cash flows ($) 0 1 2 3 4 5
Discounted Rate 20%
-1000000 40000 200000 500000 1000000 1300000
0.83 0.69 0.58 0.48 0.40 NPV ($)
IRR Project Selection Criteria:
32.56%
Discounted Flows ($) 33,333.33 138,888.89 289,351.85 482,253.09 522,440.84 1,466,268.00 466,268.00
Cummulative Discounted Flows ($) 33,333.33 172,222.22 461,574.07 943,827.16 1,466,268.00
Criteria Pay Back Years
Project A 3.26
Project B 1.25
Discounted Pay Back Years
4.11
1.66
466268
704295.27
32.56
60.52
Net Present Value NPV ($) Internal Rate of Return IRR %
Conclusion: On above criteria Project B will recommended to start a Business as it has lesser pay back period, Higher NPV and
Project B Year
Expected Cash flows ($) 0 1 2 3 4 5
Cummulative Inflows ($)
-900000 750000 600000 500000 400000 200000
750000 1350000 1850000 2250000 2450000
Payback
0.25
1.25 Years
Project B Year
Expected Cash flows ($) 0 1 2 3 4 5
0.11
Discounted Rate 20%
-900000 750000 600000 500000 400000 200000
Cummulative Discounted Flows Discounted Flows ($) ($)
0.83 0.69 0.58 0.48 0.40
Discounted Pay back
625,000.00 416,666.67 289,351.85 192,901.23 80,375.51
1.66 Years
Project B Year
Expected Cash flows ($) 0 1 2 3 4 5
Discounted Rate 20%
-900000 750000 600000 500000 400000 200000
0.83 0.69 0.58 0.48 0.40 NPV ($)
IRR
60.52%
Discounted Flows ($) 625,000.00 416,666.67 289,351.85 192,901.23 80,375.51 1,604,295.27 704,295.27
625,000.00 1,041,666.67 1,331,018.52 1,523,919.75 1,604,295.27
pay back period, Higher NPV and Higher IRR.
0.66
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