Year

CF
0
1
2

-100
70
50
13.8987%

1.577973

qtrs

OB
0.00
1.00
2.00
3.00

0
3
6
9
12

-100
40
40
40
40

0.909091
40
NPV
-100
36.36364
33.05785
30.05259
27.32054
26.79462

100.00
81.86
59.76
32.82

0
3
6
9
12

interest amtReturn
CB
21.86
40.00
81.86
17.90
40.00
59.76
13.06
40.00
32.82
7.18
40.00
0.00

0.869565 0.833333
60
80
-100
34.78261
30.24575
26.30065
22.87013
14.19913

2.277973 1.138987

-100
33.33333
27.77778
23.14815
19.29012
3.549383

0.8
100
-100
32
25.6
20.48
16.384
-5.536

0
6
12
18

-100
60
50
30
21.48%

-100
40
40
40
40
21.8623% 0.874491

Case 1
0
-100
1
50
2
50
3
30
15.6579%

10
0
6
12
18
42.97%

-100
60
50
30

0
1
2
3
4

-100
60
70
-10
5
16.08%

20

30

Years

CF1
0
1
2
3
4

-100
30
40
30
30
($0.91)

x=3
(for CF1)

cumm CF CF2
-100
-100
-70
50
-30
60
0
-30
30
50
$2.90
3
x
4
solve,
3-x
x-4
x=3.4
(for CF2)

12%
-100
-50
10
-20
30
-20
0
30
-20
0-30

Case 1
w/o interest, we would select project 1
CAse2
with 12% interest, project1 gives -ve NPV where as proje

d select project 1

ject1 gives -ve NPV where as project2 gives +ve NPV, hence go for project 2

Years

P1 CF
0
1
2
3

IRR
Selected?
Risk

P2 CF
-100
70
50
30
28%
1
20%

P3 CF
-100
60
60
60
36%
1
30%

P4 CF
-100
80
0
40
12%
0
35%

-100
40
50
60
22%
0
28%

Total capital
200.00 Risk<=25%

Which project is to be selected?

31.96%
25.00%

use of LPP with solver

Aim: which project/s to be is/are to be selected
1
2
3
4
5
6

300
0.25

CF are given for each one

Set row 7 to 1,1,1,1 where 1-selected, 0-not selected
Risk is given in problem
IRRs are calculated using standard IRR formula for each CF
Constraints are given in the box above
Sumproducts are calculated in F column