::: vuaskari.com ::: Solution FIN622 Assignment

Ans.01

Year End	Project Alpha			Project Beta
	Cash Flows	Discount Factor@12.3%	Present Value	Cash Flows	Discount Factor@12.3%	Present Value
0	(200,000)	1.00	(200,000)	(200,000)	1.00	(200,000)
1	60,000	0.8905	53,430	55,000	0.8905	48,978
2	80,000	0.7929	63,432	65,000	0.7929	51,539
3	75,000	0.7061	52,958	70,000	0.7061	49,427
4	60,000	0.6288	37,728	80,000	0.6288	50,304
NPV			7,547			247
Profitability Index
Year End	Project Alpha			Project Beta
	Cash Flows	Discount Factor@12.3%	Present Value	Cash Flows	Discount Factor@12.3%	Present Value
1	60,000	0.8905	53,430	55,000	0.8905	48,978
2	80,000	0.7929	63,432	65,000	0.7929	51,539
3	75,000	0.7061	52,958	70,000	0.7061	49,427
4	60,000	0.6288	37,728	80,000	0.6288	50,304
PV			207,548			200,247
PV			207,548			200,247
Initial Investment			200,000			200,000
Profitablity Index			1.0377375			1.001235

 

All figures above are rounded to nearest thousand rupees.

Ans.02
Project Alpha due higher NPV then other one.



Ans03
Alpha should be selected as PI  is higher for this project

Ans.04

Alpha should be selected as higher IRR the other project & feasible as it has higher IRR than RRR.

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