Assignment mgt201
Question: 1
What is the project payback period?
Answer:
Payback period= 500,000/800,000
Payback period= .625 year
Payback period is good so project is accepted
Question: 2
What is the net present value of the project? It is acceptable
Answer:
NPV= -Io+CF1/(1+i)+CF2/(1+i)^2+CF3/(1+i)^3+CF4/(1+i)^4+CF5/(1+i)^5+CF6/(1+i)^6+CF7/(1+i)^7+CF8/(1+i)^8+CF9/(1+i)^9+CF10/(1+i)^10
NPV= -500,000+800,000/ (1.14) +150,000/ (1.14) ^2+200,000/ (1.14) ^3 + 250,000/ (1.14)^4+300,000/(1.14)^5+300,000/(1.14)^6+300,000/(1.14)^7+300,000/(1.14)^8+300,000/(1.14)^9+300,000/(1.14)^10
NPV= -500,000+701754.38+115420.13+134994.3+148020.7+155810.6+136675.97+119891.2+105167.72+92252.4+80923.14
NPV= -500,000+1790910.543
NPV=1290910.543
Net present value is positive so accepted this project.
Question: 3
What is the internal rate of return?
Answer:
I assume the rate of irr=100%
NPV=0= -Io+CF1/(1+irr)+CF2/(1+irr)^2+CF3/(1+irr)^3+CF4/(1+irr)^4+CF5/(1+irr)^5+CF6/(1+irr)^6+CF7/(1+irr)^7+CF8/(1+irr)^8+CF9/(1+irr)^9+CF10/(1+irr)^10
0=-500,000+800,000/2+150,000/4+200,000/8+250,000/16+300,000/32+300,000/64+300,000/128+300,000/256+300,000/512+300,000/1024
0=-500,000+400,000+37,500+25000+15625+9375+4687.5+2343.75+1171.875+585.9375+292.968
0=-500,000+496,582.03
0=-3417.97
Calculate irr by using trial & error method
14+ (100-14)*rate 1amount/rate 1 amount – (-rate 2 amount)
14+ (86)1290910.54/1290910.54-(-3417.97)
14+ (86)1290910.54/1294328
14+ (86).9973
14+85.77
99.77%rate
Irr rate is very good so project is accepted
regard:
abdul rehman
sarim broooooooooooooooooooo mgt 201 nd sta 630 ka idea send kr dein--
On Sun, May 5, 2013 at 10:30 PM, abdul rehman <rehman51jb@gmail.com> wrote:
thanku bro.
On Mon, May 6, 2013 at 9:42 AM, Muhammad Sarim <sarim.sarwar@gmail.com> wrote:
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