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  • Homework Assignment PSB 2012

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    This document provides the relevant cash flow information for two projects, Project X and Project Y, being evaluated by a Paris cable television company. It lists the initial investment and annual cash inflows for each project over a 6 year period and provides instructions for students to calculate various capital budgeting metrics, like NPV, IRR, payback period and profitability index, to evaluate the acceptability and ranking of each project using a 10% cost of capital.

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    Homework Assignment Psb 2012

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    This document provides the relevant cash flow information for two projects, Project X and Project Y, being evaluated by a Paris cable television company. It lists the initial investment and annual cash inflows for each project over a 6 year period and provides instructions for students to calculate various capital budgeting metrics, like NPV, IRR, payback period and profitability index, to evaluate the acceptability and ranking of each project using a 10% cost of capital.

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    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
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    6 views2 pages

    Homework Assignment PSB 2012

    Uploaded by

    kenyanne
    This document provides the relevant cash flow information for two projects, Project X and Project Y, being evaluated by a Paris cable television company. It lists the initial investment and annual cash inflows for each project over a 6 year period and provides instructions for students to calculate various capital budgeting metrics, like NPV, IRR, payback period and profitability index, to evaluate the acceptability and ranking of each project using a 10% cost of capital.

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    Attribution Non-Commercial (BY-NC)
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    PSB CORPORATE FINANCE PROF PHIL H. LATIMIER, Ph.D.

    HOME WORK ASSIGNMENT IN CORPORATE FINANCE FOR PSB

    WORKING INSTRUCTIONS FOR EXAM : ONLY FINANCIAL TABLES AUTHORIZED + BUSINESS CALCULATOR

    FRANCE TV COMPANY, A PARIS CABLE TELEVISION COMPANY, IS EVALUATING 2 PROJECTS X AND Y. THE RELEVANT CASH FLOWS FOR EACH PROJECT ARE GIVEN IN THE FOLLOWING TABLE. THE APPLICABLE COST OF CAPITAL FOR USE IN EVALUATING THESE EQUALLY RISKY PROJECTS IS 10%. PROJECT X PROJECT Y

    INITIAL INVESTMENT.$70,000$85,000 YEARANNUAL CASH INFLOWS. 1$28,000$35,000 2$33,000$30,000 3$38,000$25,000 4..$20,000 5..$15,000 6..$10,000

    1. CALCULATE THE REGULAR ( 2 x 1 MARK = 2 MARKS ) AND DISCOUNTED PAY BACK ( 2 x 1 MARK = 2 MARKS ) OF EACH PROJECT. GRADING POLICY : 4 MARKS. 2. CALCULATE THE NPV OF EACH PROJECT AND ASSESS ITS ACCEPTABILITY ( 2 x 2MARKS = 4 MARKS ) GRADING POLICY : 4 MARKS. 3. CALCULATE THE IRR FOR EACH PROJECT AND ASSESS ITS ACCEPTABILITY. ( 2 X 3 MARKS = 6 MARKS ) GRADING POLICY : 6 MARKS. 4. CALCULATE THE PROFITABILITY INDEX FOR EACH PROJECT AND ASSESS ITS ACCEPTABILITY. GRADING POLICY : 2 x 1 MARK = 2 MARKS. 5. USE THE ANNUALIZED NET PRESENT VALUE ( ANPV ) APPROACH TO EVALUATE AND RANK THE PROJECTS IN DESCENDING ORDER ON THE ANPV. GRADING POLICY : 2 x 1 MARK = 2 MARKS. 6. COMPARE AND CONTRAST YOUR FINDINGS IN QUESTIONS 2 AND 5. WHICH PROJECT WOULD YOU RECOMMEND THAT THE FIRM PURCHASE ? WHY ? GRADING POLICY : 2 MARKS.

    END OF TEST.

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