Exercise 1B

Year P1 P2 P3 P4 P5 P6 P7

0 (5,000.00) (10,000.00) (15,000.00) (25,000.00) (25,000.00) (30,000.00) (35,000.00)

1 1,000.00 1,000.00 1,700.00 1,000.00 11,000.00 (3,000.00) (9,000.00)

2 1,000.00 2,000.00 1,700.00 1,200.00 10,000.00 10,000.00 (3,000.00)

3 1,000.00 2,000.00 1,700.00 3,000.00 9,000.00 9,000.00 6,000.00

4 800.00 3,000.00 1,700.00 4,000.00 8,000.00 6,000.00 6,000.00

5 800.00 3,000.00 1,700.00 5,000.00 7,000.00 6,000.00 8,000.00

6 700.00 4,000.00 1,700.00 6,000.00 6,000.00 6,000.00 12,000.00

7 600.00 4,000.00 1,700.00 7,000.00 5,000.00 4,500.00 12,000.00

8 600.00 2,000.00 1,700.00 9,000.00 4,000.00 4,500.00 14,000.00

9 500.00 2,000.00 1,700.00 12,000.00 3,000.00 3,000.00 14,000.00

10 500.00 2,000.00 1,700.00 20,000.00 5,000.00 3,000.00 14,000.00

Sum of the Cash inflows 7,500.00 25,000.00 17,000.00 68,200.00 68,000.00 52,000.00 86,000.00

Excess of Cash inflow

over initial investment 2,500.00 15,000.00 2,000.00 43,200.00 43,000.00 19,000.00 39,000.00
(Cash outflow)

Projects Net Cashflow Payback periods NPV IRR Profitability Index

P1 2500.00 5.57 106.13 10% 1.02
P2 15000.00 4.67 5562.84 19% 1.56
P3 2000.00 8.82 -4089.98 2% 0.73
P4 43200.00 6.69 11224.35 15% 1.45
P5 43000.00 2.44 22488.69 32% 1.90
P6 19000.00 5.33 1710.47 10% 1.06
P7 39000.00 7.21 1406.67 10% 1.04
NPV Calcualtion
Discount Rate 9%
Year Project 1 Project 2 Project 3 Project 4 Project 5 Project 6 Project 7

0 (5,000.00) (10,000.00) (15,000.00) (25,000.00) (25,000.00) (30,000.00) (35,000.00)

1 1,000.00 1,000.00 1,700.00 1,000.00 11,000.00 (3,000.00) (9,000.00)

2 1,000.00 2,000.00 1,700.00 1,200.00 10,000.00 10,000.00 (3,000.00)

3 1,000.00 2,000.00 1,700.00 3,000.00 9,000.00 9,000.00 6,000.00

4 800.00 3,000.00 1,700.00 4,000.00 8,000.00 6,000.00 6,000.00

5 800.00 3,000.00 1,700.00 5,000.00 7,000.00 6,000.00 8,000.00

6 700.00 4,000.00 1,700.00 6,000.00 6,000.00 6,000.00 12,000.00

7 600.00 4,000.00 1,700.00 7,000.00 5,000.00 4,500.00 12,000.00

8 600.00 2,000.00 1,700.00 9,000.00 4,000.00 4,500.00 14,000.00

500.00 2,000.00 1,700.00 12,000.00 3,000.00 3,000.00 14,000.00

9
10 500.00 2,000.00 1,700.00 20,000.00 5,000.00 3,000.00 14,000.00

NPV 106.13 5,562.84 (4,089.98) 11,224.35 22,488.69 1,710.47 1,406.67

IRR 9.56% 19.13% 2.34% 15.03% 32.39% 10.26% 9.51%
PI 1.02 1.56 0.73 1.45 1.90 1.06 1.04
 Payback Period Calcualtion

Accum. CF Accum. CF Accum. CF Accum. CF Accum. CF Accum. CF Accum. CF

Year Project 1 Project 2 Project 3 Project 4 Project 5 Project 6 Project 7
Inflows Inflows Inflows Inflows Inflows Inflows Inflows
0 (5,000.00) (10,000.00) (15,000.00) (25,000.00) (25,000.00) (30,000.00) (35,000.00)
1 1,000.00 1,000.00 1,000.00 1,000.00 1,700.00 1,700.00 1,000.00 1,000.00 11,000.00 11,000.00 (3,000.00) (3,000.00) (9,000.00) (9,000.00)
2 1,000.00 2,000.00 2,000.00 3,000.00 1,700.00 3,400.00 1,200.00 2,200.00 10,000.00 21,000.00 10,000.00 7,000.00 (3,000.00) (12,000.00)
3 1,000.00 3,000.00 2,000.00 5,000.00 1,700.00 5,100.00 3,000.00 5,200.00 9,000.00 30,000.00 9,000.00 16,000.00 6,000.00 (6,000.00)
4 800.00 3,800.00 3,000.00 8,000.00 1,700.00 6,800.00 4,000.00 9,200.00 8,000.00 38,000.00 6,000.00 22,000.00 6,000.00 -
5 800.00 4,600.00 3,000.00 11,000.00 1,700.00 8,500.00 5,000.00 14,200.00 7,000.00 45,000.00 6,000.00 28,000.00 8,000.00 8,000.00
6 700.00 5,300.00 4,000.00 15,000.00 1,700.00 10,200.00 6,000.00 20,200.00 6,000.00 51,000.00 6,000.00 34,000.00 12,000.00 20,000.00
7 600.00 5,900.00 4,000.00 19,000.00 1,700.00 11,900.00 7,000.00 27,200.00 5,000.00 56,000.00 4,500.00 38,500.00 12,000.00 32,000.00
8 600.00 6,500.00 2,000.00 21,000.00 1,700.00 13,600.00 9,000.00 36,200.00 4,000.00 60,000.00 4,500.00 43,000.00 14,000.00 46,000.00
9 500.00 7,000.00 2,000.00 23,000.00 1,700.00 15,300.00 12,000.00 48,200.00 3,000.00 63,000.00 3,000.00 46,000.00 14,000.00 60,000.00
10 500.00 7,500.00 2,000.00 25,000.00 1,700.00 17,000.00 20,000.00 68,200.00 5,000.00 68,000.00 3,000.00 49,000.00 14,000.00 74,000.00

Payback periods 5.57 4.67 8.82 6.69 2.44 5.33 7.21

 Payback Period Working
Discount Rate 9%
Net CF 2,500.00 15,000.00 2,000.00 43,200.00 43,000.00 19,000.00 39,000.00
Year Project 1 NPV Accum. CF Project 2 NPV Accum. CF Project 3 NPV Accum. CF Project 4 NPV Accum. CF Project 5 NPV Accum. CF Project 6 NPV Accum. CF Project 7 NPV Accum. CF
Inflows Inflows Inflows Inflows Inflows Inflows Inflows
0 (5,000.00) (10,000.00) (15,000.00) (25,000.00) (25,000.00) (30,000.00) (35,000.00)
1 1,000.00 917.43 917.43 1,000.00 917.43 917.43 1,700.00 1,559.63 1,559.63 1,000.00 917.43 917.43 11,000.00 10,091.74 10,091.74 (3,000.00) (2,752.29) (2,752.29) (9,000.00) (8,256.88) (8,256.88)
2 1,000.00 841.68 1,759.11 2,000.00 1,683.36 2,600.79 1,700.00 1,430.86 2,990.49 1,200.00 1,010.02 1,927.45 10,000.00 8,416.80 18,508.54 10,000.00 8,416.80 5,664.51 (3,000.00) (2,525.04) (10,781.92)
3 1,000.00 772.18 2,531.29 2,000.00 1,544.37 4,145.16 1,700.00 1,312.71 4,303.20 3,000.00 2,316.55 4,244.00 9,000.00 6,949.65 25,458.19 9,000.00 6,949.65 12,614.16 6,000.00 4,633.10 (6,148.82)
4 800.00 566.74 3,098.03 3,000.00 2,125.28 6,270.43 1,700.00 1,204.32 5,507.52 4,000.00 2,833.70 7,077.70 8,000.00 5,667.40 31,125.60 6,000.00 4,250.55 16,864.71 6,000.00 4,250.55 (1,898.27)
5 800.00 519.95 3,617.98 3,000.00 1,949.79 8,220.23 1,700.00 1,104.88 6,612.41 5,000.00 3,249.66 10,327.36 7,000.00 4,549.52 35,675.12 6,000.00 3,899.59 20,764.30 8,000.00 5,199.45 3,301.18
6 700.00 417.39 4,035.37 4,000.00 2,385.07 10,605.30 1,700.00 1,013.65 7,626.06 6,000.00 3,577.60 13,904.96 6,000.00 3,577.60 39,252.72 6,000.00 3,577.60 24,341.90 12,000.00 7,155.21 10,456.39
7 600.00 328.22 4,363.59 4,000.00 2,188.14 12,793.43 1,700.00 929.96 8,556.02 7,000.00 3,829.24 17,734.20 5,000.00 2,735.17 41,987.89 4,500.00 2,461.65 26,803.56 12,000.00 6,564.41 17,020.80
8 600.00 301.12 4,664.71 2,000.00 1,003.73 13,797.17 1,700.00 853.17 9,409.19 9,000.00 4,516.80 22,251.00 4,000.00 2,007.47 43,995.36 4,500.00 2,258.40 29,061.95 14,000.00 7,026.13 24,046.93
9 500.00 230.21 4,894.92 2,000.00 920.86 14,718.02 1,700.00 782.73 10,191.92 12,000.00 5,525.13 27,776.13 3,000.00 1,381.28 45,376.64 3,000.00 1,381.28 30,443.24 14,000.00 6,445.99 30,492.92
10 500.00 211.21 5,106.13 2,000.00 844.82 15,562.84 1,700.00 718.10 10,910.02 20,000.00 8,448.22 36,224.35 5,000.00 2,112.05 47,488.69 3,000.00 1,267.23 31,710.47 14,000.00 5,913.75 36,406.67

Payback periods 9.50 5.75 15.70 8.50 2.93 8.68 9.76