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Discounted Cash Flow Activity 2 - April 02, 2015 PDF
Discounted Cash Flow Activity 2 - April 02, 2015 PDF
Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Annual
Expenditure
50,000
2,000,000
10,000,000
15,000,000
7,000,000
2,000,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
700,000
2,000,000
500,000
12,000,000
Cumulative
Value of
Investment
50,000
2,050,000
12,050,000
27,050,000
34,050,000
36,050,000
36,550,000
37,050,000
37,550,000
38,050,000
38,550,000
39,050,000
39,550,000
40,250,000
42,250,000
42,750,000
54,750,000
Annual
Income
from
Investment
0
0
0
0
0
50,000
10,000,000
15,000,000
20,000,000
30,000,000
45,000,000
50,000,000
25,000,000
10,000,000
10,000,000
10,000,000
50,000
Cumulative
ROI
0
0
0
0
0
50,000
10,050,000
25,050,000
45,050,000
75,050,000
120,050,000
170,050,000
195,050,000
205,050,000
215,050,000
225,050,000
225,100,000
Discount
Rate
(4%)
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
Page 1 of 4
Discount
Factor
0.962
0.925
0.889
0.855
0.822
0.790
0.760
0.731
0.703
0.676
0.650
0.625
0.601
0.577
0.555
0.534
0.513
Net Annual
Cash Flow
-50,000.00
-2,000,000.00
-10,000,000.00
-15,000,000.00
-7,000,000.00
-1,950,000.00
9,500,000.00
14,500,000.00
19,500,000.00
29,500,000.00
44,500,000.00
49,500,000.00
24,500,000.00
9,300,000.00
8,000,000.00
9,500,000.00
-11,950,000.00
Annual NPV
-48,076.92
-1,849,112.43
-8,889,963.59
-12,822,062.87
-5,753,489.75
-1,541,113.33
7,219,219.23
10,595,007.97
13,700,441.34
19,929,142.98
28,906,351.45
30,917,553.95
14,714,065.11
5,370,518.27
4,442,116.02
5,072,127.67
-6,134,810.29
Cumulative
NPV
-48,076.92
-1,897,189.35
-10,787,152.94
-23,609,215.80
-29,362,705.55
-30,903,818.87
-23,684,599.65
-13,089,591.68
610,849.67
20,539,992.65
49,446,344.10
80,363,898.06
95,077,963.17
100,448,481.44
104,890,597.46
109,962,725.13
103,827,914.84
1.
Solution in Table 1
2.
Question 2
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
0
0
10
12
14
16
-50,000,000
Annual Expenditure
Page 2 of 4
Cumulative ROI
18
3.
a. Solution in Table 1
b.
Question 3b
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
0
0
10
12
14
-50,000,000
Annual Expenditure
Cumulative ROI
Annual NPV
Cumulative NPV
Page 3 of 4
16
18
4.
Annual NPV becomes positive in the 7th year. Payback Period is 7 years
5.
From the table 1;
Cumulative NPV = 103,827,914.84
Page 4 of 4