CAPITAL BUDGETING

YEAR PROJECT A CCF NPV IRR@5.5%

0 -10000
1 3500 3500 R=12% 3125 3317.536
2 3500 7000 2790.17857 3144.583
3 1800 8800 1281.20445 1532.905
4 1500 10300 953.277118 1210.825
5 1000 11300 567.426856 765.1344
NPV 8717.08699 9970.983
Calculate PBV,NPV,IRR,PI NPV ₹ -1,145.46 -29.0169
-1283
PBV 3.8
3.8 PI 1.8717
NPV@12% 8717.0869908

IRR 5.3665%
BY Assuming the value 5.25
 CAPITAL STRUCTURE
COMPANY A B
EBIT 10,000 10,000
COST OF DEBT 6% 3%
COST OF EQUITY 10% 10%
DEBT 0 50,000
M.V OF EQUITY 100,000 70,000

A B
EBIT 10,000 10,000
(-) INTEREST 0 1,500 (50,000*3%)
SHAREHOLDERS EQUITY 10,000 8,500
M.V.EQUITY 100,000 70,000
M.V.DEBT 0 50,000
DEBT+EQUITY 100,000 120,000

OVER ALL COST OF FIRM (Ko) 10.0%