Exercise 1

Project A

Project B

1 Revenues

1 Revenues

2 Operating costs

2 Operating costs

3 Opeating Profit

3 Opeating Profit

4 Depreciation

4 Depreciation

5 Profit before tax

5 Profit before tax

6 Tax

6 Tax

7 Profit After Tax

7 Profit After Tax

8 Cash Flow

8 Cash Flow

9 Discount rate

9 Discount rate

11 PVIF

11 PVIF

12 PV of Cash Flows

12 PV of Cash Flows

13 NPV

13 NPV

14 IRR

14 IRR
0

Project C

Project D

1 Revenues

1 Revenues

2 Operating costs

2 Operating costs

3 Opeating Profit

3 Opeating Profit

4 Depreciation

4 Depreciation

5 Profit before tax

5 Profit before tax

6 Tax

6 Tax

7 Profit After Tax

7 Profit After Tax

8 Cash Flow

8 Cash Flow

9 Discount rate

9 Discount rate

11 PVIF

11 PVIF

12 PV of Cash Flows

12 PV of Cash Flows

13 NPV

13 NPV

14 IRR

14 IRR

Exercise - 2
Assumption

Given

10

13

13

8.58

60%

7.8

7.8

5.148

23.50%

2.35

3.055

3.055

2.0163

Given

0.2

SLM

0.1

0.1

0.1

0.1

6 Profit before taxes

1.35

2.045

2.045

1.3157

7 Taxes

0.54

0.818

0.818

0.52628

0.81

1.227

1.227

0.78942

0.91

1.327

1.327

0.88942

2.7

3.51

3.51

2.3166

1.1583

2.7

3.51

3.51

2.3166

2.7

0.81

1 Sales
2 Cost of Sales
3 SG &A expenses
4 Introductory expenses
5 Depreciation

8 Profit after taxes

40%

9 Gross Cash Flow

9 Net working capital (end)

27%

Net Working Capital(beg)

Change in Net working capital
11 Capital Expenditure
10 Free Cash Flow
12 PVIF

Delta NWC

0.5

-1.1934 -1.1583

13 Present Value
14 NPV
11 IRR

DR

NPV

1900.05
1800.05
1700.05
1600.05

1500.05
1400.05
1300.05
1200.05
1100.05
1000.05
900.05
800.05
700.05
600.05
500.05
400.05
300.05

200.05
100.05
0.05
0%

0.05
0%

5
4.29
2.574
1.00815
0.1
0.60785
0.24314
0.36471
0.46471
0
1.1583
-1.1583

Series1

2%

2%

Series1

0
1
2
3
4
5
6
7
8
9
11
12
13
14

1
2
3
4
5
6
7
8
9
11
12
13
14

Project A
Revenues
Operating costs
Opeating Profit
Depreciation
Profit before tax
Tax
Profit After Tax
Cash Flow
Discount rate
PVIF
PV of Cash Flows
NPV
IRR
MIRR

Project C
Revenues
Operating costs
Opeating Profit
Depreciation
Profit before tax
Tax
Profit After Tax
Cash Flow
Discount rate
PVIF
PV of Cash Flows
NPV
IRR

-10000
10%
1.000
-10000.000
-909.091
0%

0.90909
9091

0
0
0
0
0
0
0
0
0
0.82645
0

-10000
10.0000
1.0000000
-10000
-9587.5115
0.33530

21000
11000
10000
10000
0
0
0
10000

10000
5555
4445
3333
1112
445
667
4000

11000
4889
6111
3333
2778
1111
1667
5000

Exercise 1
3
0
0
0
0
0
0
0
0
0
0.75131
0

3
30000
15555
14445
3333
11112
4445
6667
10000

0.0909091 0.0082645 0.0007513

364
41
8

0
1
2
3
4
5
6
7
8
9
11
12
13
14

Project B
Revenues
Operating costs
Opeating Profit
Depreciation
Profit before tax
Tax
Profit After Tax
Cash Flow
Discount rate
PVIF
PV of Cash Flows
NPV
IRR

1
2
3
4
5
6
7
8
9
11
12
13
14

Project D
Revenues
Operating costs
Opeating Profit
Depreciation
Profit before tax
Tax
Profit After Tax
Cash Flow
Discount rate
PVIF
PV of Cash Flows
NPV
IRR

-10000
10.000
1.000000
-10000
-9256
32%

-10000
10%
1
-10000
4650.985725
0.42747

15000
5833
9167
5000
4167
1667
2500
7500

17000
7833
9167
5000
4167
1667
2500
7500

0.090909 0.008264
682
62

30000
15555
14445
3333
11112
4445
6667
10000

10000
5555
4445
3333
1112
445
667
4000

0.909091 0.826446
9091
3306

DR
0.1000
0.1200
0.1400
0.1600
0.1800
0.2000
0.2200
0.2400
0.2600
0.2800
0.3000
0.3200
0.3400
0.3600
0.3800
0.4000
0.4200
0.4400
0.4600
0.4800

NPV C
DR
-9588
5282
0.1000
4675
0.1200
4106
0.1400
3571
0.1600
3067
0.1800
2593
0.2000
2145
0.2200
1723
0.2400
1323
0.2600
945
0.2800
587
0.3000
248
0.3200
-74
0.3400
-380
0.3600
-671
0.3800
-947.41
0.4000
-1210.83
0.4200
-1461.87
0.4400
-1701.28
0.4600
-1929.79
0.4800

NPV D

Diff
4651
4651
4253
3875
3516
3174
2848
2537
2240
1956
1685
1425
1176
937
708
489
277
74
-122
-310
-491

631
422
231
55
-106
-255
-391
-517
-633
-739
-838
-928
-1012
-1088
-1159
-1225
-1285
-1340
-1391
-1438

Chart Title
6000

5000

4000

3000

2000

1000

0
0.0000

0.1000

0.2000

0.3000

0.4000

-1000

-2000

Series1
-3000

Series2

0.5000

0.6000

Series1

Series2

-3000

Project
B
C
D

NPV
3017
5281
4650

3
1
2

IRR
0.3200000
0.3300000
0.4300000

3
2
1

3
0
0
0
0
0
0
0
0
0
0.000751
0

3
5000
2222
2778
3333
-555
-222
-333
3000
0.751315
2254