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    1. This document discusses various project evaluation techniques using the non-discounted cash flow approach. It provides examples of calculating payback period, internal rate of return, and net present value for potential projects. 2. Formulas are given for calculating payback period, internal rate of return, and net present value based on cash inflows, costs, and discount rates. Examples show applying these techniques to sample cash flow scenarios to evaluate potential projects. 3. The examples illustrate how these techniques can be used to analyze projects, compare project alternatives, and determine whether a project should be accepted or rejected.

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    1. This document discusses various project evaluation techniques using the non-discounted cash flow approach. It provides examples of calculating payback period, internal rate of return, and net present value for potential projects. 2. Formulas are given for calculating payback period, internal rate of return, and net present value based on cash inflows, costs, and discount rates. Examples show applying these techniques to sample cash flow scenarios to evaluate potential projects. 3. The examples illustrate how these techniques can be used to analyze projects, compare project alternatives, and determine whether a project should be accepted or rejected.

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    1. This document discusses various project evaluation techniques using the non-discounted cash flow approach. It provides examples of calculating payback period, internal rate of return, and net present value for potential projects. 2. Formulas are given for calculating payback period, internal rate of return, and net present value based on cash inflows, costs, and discount rates. Examples show applying these techniques to sample cash flow scenarios to evaluate potential projects. 3. The examples illustrate how these techniques can be used to analyze projects, compare project alternatives, and determine whether a project should be accepted or rejected.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    49 views3 pages

    Solution

    Uploaded by

    YameteKudasai
    1. This document discusses various project evaluation techniques using the non-discounted cash flow approach. It provides examples of calculating payback period, internal rate of return, and net present value for potential projects. 2. Formulas are given for calculating payback period, internal rate of return, and net present value based on cash inflows, costs, and discount rates. Examples show applying these techniques to sample cash flow scenarios to evaluate potential projects. 3. The examples illustrate how these techniques can be used to analyze projects, compare project alternatives, and determine whether a project should be accepted or rejected.

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    Project Evaluation Techniques

    Non-discounted cash flow Approach

    11. 16,000/(4,400+1,600) =P30,000


    =2.666 years
    24. [800,000-(4,000,000/10)]/4,000,000
    12. 4,400/16,000 =10%
    =27.5%
    25.
    13. 250,000/[80,000-(30,000*40%)]
    250,000/68,000 26.
    =3.67647 years Year Net cash Cost of PBP
    inflow project
    14. 50,000/15,000 0 45,000
    =3.333 years 1 9,000 36,000 1
    2 12,000 24,000 1
    3 15,000 9,000 1
    15. {15,000-[(50,000-5000)/8]}/50,000
    4 9,000 0 1
    9,375/50,000 4 years
    =18.75%
    27. [65,000-(200,000/5)]/200,000
    16. 150,000/40,000 =12.5%
    =3.75 years
    28.
    17. [40,000-(150,000/10)]/150,000 Year Net Cost of project PBP
    =16.666% cash
    18. inflow
    Year Net cash Cost of project PBP 0 420,000
    inflow 1 145,000 275,000 1
    0 105,000 2 151,000 124,000 1
    1 50,000 55,000 1 3 162,000 (124,000/162,000) .76543
    2 45,000 10,000 1 2.76543
    3 40,000 (10,000/40,000) .25 years
    2.25
    years 29. (55,000-12,000)/(250,000-10,000)
    =17.91666%
    19. (50,000+45,000+10,000)/2.25
    =P46,666.666 30. 2,000*13.181
    =P26,362
    20. (15,000+17,000+19,000+21,000+23,000)/5yrs.
    105,000
    =18.09523%

    21. (70,000+78,000+86,000+94,000+102,000)/5yrs.
    (500,000/2)
    =34.4%

    22.
    Net Cost of project PBP
    Year cash
    inflow
    0 500,000
    1 240,000 260,000 1
    2 216,000 44,000 1
    3 192,000 (44,000/192,000) .22916
    2.22916
    years
    23. 3,000/10%
    1. Year 3 [85,000-(160,000*30%)]*.40= 14,800
    2. 8.
    50,000 .81 40,500 Year Net cash Cost PBP
    45,000 .65 29,250 flow
    40,000 .52 20,800 0 160,000
    35,000 .42 14,700 1 70,200 89,800 1
    30,000 .34 10,200 2 76,600 13,200 1
    Cash Flows 115,450 3 76,200 (13,200/76,200) .17232
    Cost (105,000) 2.17232
    NPV P10,450
    9. Net Cash Flow(70000-20000) 50,000
    3. Tax Shield(50000-(100/5))*.4 (12,000)
    Rate PVF Difference Total After-tax Cash flow 38,000
    16% 4.0386 Multiply by: PV of OA 3.6047
    }.0386 Present Value 136,981.49
    IRR 4.00 }.1162
    Cost (100,000.00)
    }.0776
    Net Present Value P36,981.49
    17% 3.9224
    Lower Limit (IRR) = 16% + 1%(.0386/.1162)
    = 16.33% 10.
    240,000 .89 213,600
    216,000 .80 172,800
    4.
    192,000 .71 136,320
    P Q R S
    168,000 .64 107,520
    NPV 23,370 29,827 27,333 (7,854)
    144,000 .57 82,800
    P.I. 1.12 1.13 1.14 .96
    Cash Flows 712,320
    Cost 200,00 235,000 190,000 210,000
    Cost (500,000)
    0
    NPV P212,320
    Capital Budget 400,000 > 235,000+190,000
    11. 712,320/500,000
    5. =1.42464
    P Q
    NPV 23,370 29,827
    12. Cash inflow 800,000
    IRR 18.07% 17.6%
    Multiply by: PV of OA @14% 5.21611
    Life of Project 3 5
    Despite P’s IRR > Q’s, life of project is only 3 yrs. Present Value 4,172,892.51
    Cost 4,000,000
    6. Net Present Value 172,892.51
    PV of 1
    @14%* .26974 20,000 5,394.8 13.
    PV of OA
    @14% 5.21611 12,000 62,593.38
    Cash flow 67,988.18 14.
    Cost (100,000)_ A B
    NPV -32,011.82 Cash Inflow 60,000 13,000
    PVF .73502 3.31212
    *Discount rate= 5% + (10%-5%)1.8 Present Value 44,101.79 43,057.64
    = 14% Cost (30,000) (30,000)
    NPV 14,101.79 13,057.64
    7.
    85,000- 14,800 .862 60,512.4 15. PVF of OA @10% for 3 yrs. 2.48685
    85,000- 8,400 .743 56,913.8 20,000*2.48685
    85,000+6,000-14,800 .641 _48,844.2 45,000
    Net Cash flow 166,270.4 =1.10526
    Cost (160,000)
    NPV P6,270.4
    16. 1,500,000/400,000
    =3.75 years
    After-tax cash flows:
    Year 1 [85,000-(160,000*30%)]*.40= 14,800
    Year 2 [85,000-(160,000*40%)]*.40= 8,400
    17. 21.
    Rate PVF Difference Total Cash flow (400000-104800) 295,200
    10% 3.7908 Tax Shield (295,200-(1000/5))*.40 38,080
    }.0408 After-tax cash inflow 257,120
    IRR 3.75 }.0949 PVF of OA 3.7908
    }.0541 Present Value 974,690.49
    11% 3.6959 Cost (1,000,000)
    Lower Limit (IRR) = 10% + 1%(.0408/.0949) Net Present Value -25,309.50
    = 10.4299%
    22. 371,120/4.639
    18. = 80,000
    Sales(12,000*12,000u) 144,000,000
    Variable (7,000*12,000u) (84,000,000) 23.
    Fixed (25,000,000) Rate PVF Difference Total
    Cash Inflow 35,000,000 14% 3.433
    Tax Shield: (35M-(80/5))*.30 (5,700,000) }.0152
    After-tax Cash flow 29,300,000 IRR 3.4482 }.1113
    Multiply by: PVF of OA @12% 3.60477 }.0961
    Present Value 105,619,942.726 15% 3.3521
    Cost (80,000,000.00) Lower Limit (IRR) = 14% + 1%(.0152/.1113)
    NPV 25,619,942.726 = 14.1365%

    19. 24. 2,000*4.355


    Before-tax cash inflow 17,861.60 = P8,710
    Tax Shield (17,860-(42,825/4))*40% 2,861.50
    After-tax cash flow (42,825/2.85498) 15,000.10
    25.
    Cost savings(10000*3)*2 60,000
    20. 16,000*12%
    Tax Shield(60,000-(150/5))*25% (7,500)
    =P1,920
    After-tax cash flow 52,500

    PV of after-tax(52,500*3.60478) 189,250
    PV of Salvage value(25,000*.56743) 14,186
    Cost (175,000)
    Net Present Value 28,436

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