Q 1.

For the given cash flow and discount rate, calculate

1. Net profit payback.
2. Payback Period
3. Discounted cash flow.
4. Discounted payback.
5. ROI ,NVP ,IRR, benefit cost ratio.

Year Net Cash Flow

0 -280000
1 70000
2 70000
3 70000
4 70000
5 70000

Assume discount rate is 10% and analyze the result.

Year Net Cash Flow cf Discounted Cash cf
flow(@10%)
0 -280000 - -280000 -
280000 280000
1 70000 - 63636.36364 -
210000 216364
2 70000 - 57851.23967 -
140000 158512
3 70000 -70000 52592.03606 -
105920
4 70000 0 47810.94188 -
58109.
4
5 70000 70000 43464.49261 -
14644.
9
For 20% discount rate.
Year Net Cash Flow cf Discounted Cash cf
flow(@10%)
0 -280000 -280000 -280000 -280000
1 70000 -210000 58333.33333 -221667
2 70000 -140000 48611.11111 -173056
3 70000 -70000 40509.25926 -132546
4 70000 0 33757.71605 -98788.6
5 70000 70000 28131.43004 -70657.2
Q 2. For the given cash flow and discount rate, calculate
1. Net profit payback.
2. Payback Period
3. Discounted cash flow.
4. Discounted payback.
5. ROI ,NVP ,IRR, benefit cost ratio.

Yea Net Cash cf

r Flow
0 -200000 -200000
1 40000 -160000
2 40000 -120000
3 40000 -80000
4 40000 -40000
5 40000 0
6 40000 40000
7 40000 80000
8 40000 120000
9 40000 160000
10 40000 200000

Assume discount rate is 12% and analyze the result.

Year Net Cash cf Discounted cf Cummulative
Flow Discounted cf
0 -200000 -200000 -200000.0 -200000.0
1 40000 -160000 36363.6 -163636.4
2 40000 -120000 31887.8 -131748.6
3 40000 -80000 28471.2 -103277.4
4 40000 -40000 25420.7 -77856.7
5 40000 0 22697.1 -55159.6
6 40000 40000 20265.2 -34894.4
7 40000 80000 18094.0 -16800.4
8 40000 120000 16155.3 -645.1
9 40000 160000 14424.4 13779.3
10 40000 200000 12878.9 26658.3
For 18% discount rate.
Cummulative
Year Net Cash Flow cf Discounted cf Discounted cf
0 -200000 -200000 -200000.0 -200000.0
1 40000 -160000 33898.3 -166101.7
2 40000 -120000 28727.4 -137374.3
3 40000 -80000 24345.2 -113029.1
4 40000 -40000 20631.6 -92397.5
5 40000 0 17484.4 -74913.2
6 40000 40000 14817.3 -60095.9
7 40000 80000 12557.0 -47538.9
8 40000 120000 10641.5 -36897.4
9 40000 160000 9018.2 -27879.1
10 40000 200000 7642.6 -20236.5
Q3.For the given cash flow of the project 1 and project 2 find the following and conclude
which one will be the best project for the investment. Compare the financial analysis result of
the true projects and a verb and write down your discussion and conclusion.
1. Net profit payback.
2. Payback Period
3. Discounted cash flow.
4. Discounted payback.
5. ROI ,NVP ,IRR, benefit cost ratio.
Assume discount rate is 8%.
Project 1
Period Cash Inflow Cash Outflow
0 -1500000
1 325000 -100000
2 475000 -100000
3 550000 -100000
4 595000 -100000
5 625000 -100000

Net Discounted
Period Cashflow CF Cashflow Cashflow CF
-
0 -1500000 -1500000 -1500000.00 1500000.00
-
1 225000 -1275000 208333.33 1291666.67
2 375000 -900000 321502.06 -970164.61
3 450000 -450000 357224.51 -612940.10
4 495000 45000 363839.78 -249100.32
5 525000 570000 357306.18 108205.85
 Project 2
Period Cash Inflow Cash Outflow
0 -250000
1 65000 -10000
2 75000 -10000
3 82500 -10000
4 86000 -10000
5 89000 -10000

Cash Cash Net CF Discounted

Period Inflow Outflow Cashflow Cashflow Cashflow CF

0 -250000 -250000 -250000 -250000.00 -250000.00

1 65000 -10000 55000 -195000 50925.93 -199074.07

2 75000 -10000 65000 -130000 55727.02 -143347.05

3 82500 -10000 72500 -57500 57552.84 -85794.21

4 86000 -10000 76000 18500 55862.27 -29931.94

5 89000 -10000 79000 97500 53766.07 23834.13

Hence project two is better than project one, as the payback period of project 2 is less than
that of project one.