Homework Answers
rate positively ..
| i | ii | iii | iv=i*iii | v=ii*iii | vi | vii | |||
| Year | Cash flow S | Cash flow L | PVIF @ 14% | Present value S | Present value L | Cumulative PV S | Cumulative PV L | ||
| 0 | -10000 | -25000 | 1.0000 | (10,000.00) | (25,000.00) | (10,000.00) | (25,000.00) | ||
| 1 | 3500 | 8000 | 0.8772 | 3,070.18 | 7,017.54 | (6,929.82) | (17,982.46) | ||
| 2 | 3500 | 8000 | 0.7695 | 2,693.14 | 6,155.74 | (4,236.69) | (11,826.72) | ||
| 3 | 3500 | 8000 | 0.6750 | 2,362.40 | 5,399.77 | (1,874.29) | (6,426.94) | ||
| 4 | 3500 | 8000 | 0.5921 | 2,072.28 | 4,736.64 | 197.99 | (1,690.30) | ||
| 5 | 3500 | 8000 | 0.5194 | 1,817.79 | 4,154.95 | 2,015.78 | 2,464.65 | ||
| 2,015.78 | 2,464.65 | 4,031.57 | 4,929.30 | ||||||
| ans a) | NPV S | 2,015.78 | Based on NPV project L should be selected | ||||||
| NPV L | 2,464.65 | ||||||||
| Formula | |||||||||
| ans b) | IRR S | 22.11% | Based on IRR project S should be selected | =IRR(D5:D10) | |||||
| IRR L | 18.03% | =IRR(E5:E10) | |||||||
| Ans c) | MIRR S | 18.26% | Based on MIRR project S should be selected | ||||||
| MIRR L | 16.16% | ||||||||
| Ans d) | PI S | 3.90 | year | ||||||
| PI L | 4.41 | year | |||||||
| Project L should be selected. | |||||||||
> > This answer provided is only partially correct. The PI calculation is incorrect. It should be: 1 + (NPV/Initial cost) for both Project S and Project L. The answer is 1.20 for Project S and 1.10 for Project L
Frank Abagnale Sun, Dec 5, 2021 5:30 PM
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> This answer provided is only partially correct. The PI calculation is incorrect. It should be: 1 + (NPV/Initial cost) for both Project S and Project L. The answer is 1.20 for Project S and 1.10 for Project L
Frank Abagnale Sun, Dec 5, 2021 5:30 PM