Finance

Answer 1 Payback = No. of years before lavish recuperation+ Amount of investment un-recovered at start of of initial investmentsecond year --------------------------------------------------------- Total cash take to the woods gene trampd during recovery year Payback for marriage offer 1 = 3 + (27000/73000) = 3.369863 years Payback for proposal 2 = 2 + (48000/66000) =2.7272727 years Payback for proposal 3 = 1 + (55000/145000) = 1.3793103 years Payback for proposal 4 = 2 + (8000/16000) = 2.5 years Payback for proposal 5 = 1 + (0/70000) = 1 year n currency flow (Cn Ft) Net Present Value (NPV) = ? -------------------------- t=0 (1 + rate of return)n NPV for proposal 1 = (-100000) + {73000/(1+.1)3} + {73000/(1+.1)4} + {73000/(1+.1)5} = $ 50033.21 NPV for proposal 2 = (-180000) + {66000/(1+.1)1} + {66000/(1+.1)2} + {66000/(1+.1)3} + {66000/(1+.1)4} + {66000/(1+.1)5} = $ 70191.9 NPV for proposal 3 = (-200000) + {145000/(1+.1)1} + {145000/(1+.1)2} = $ 51652.89 NPV for proposal 4 = (-40000) + {16000/(1+.1)1} + {16000/(1+.1)2} + {16000/(1+.1)3} + {16000/(1+.1)4} + {16000/(1+.1)5} = $ 20652.83 NPV for proposal 5 = (-70000) + {70000/(1+.1)1} + {70000/(1+.1)2} + {70000/(1+.1)3} + {70000/(1+.1)4} + {70000/(1+.

1)5} = $ 195355.05 n Cash flow (Cn Ft) Net Present Value (NPV) = ? ------------------------------------ t=0 (1 + Internal rate of return)n NPV for proposal 1 at 20% discount rate = (-100000) + {73000/(1+.2)3} + {73000/(1+.2)4} + {73000/(1+.2)5} = $ 6786.90 NPV for proposal 1 at 22% discount rate = (-100000) + {73000/(1+.22)3} + {73000/(1+.22)4} + {73000/(1+.22)5} = $ 163.67 Let IRR for project 1 be x 22% - 20%163.67 6786.90 -------------- = ---------------------- x% - 22% 0 163.67 therefore, x = 22.049 i.e. IRR = 22.049 NPV for proposal... If you want to get a full essay, order it on our website: Orderessay

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