Suppose you are thinking of investing in Shares of Company XYZ.

The current market price of

each share of this company is BDT 150. You are estimating that from each share you will get
dividends worth BDT 10, 15, and 20 in years 1,2, and 3, respectively. At the end of Year 3, you
are expecting that the market price of this share will become BDT 300.
 You know that for any deposit in your bank, you can earn 7% interest in the coming 3 years.
 Should you invest in this share?
 You plan to sell off the shares at the end of Year 3

PI breakeven=1

If PI= 0.6

+0.6
Mutually Exclusive

Choosing one project will automatically reject the other projects

Independent Projects

2 Mutually Exclusive Projects

Project A: Initial Investment =(10,000)

Project B: Initial Investment = (15,000)

• NPV (A) = 3000 •NPV (B) = 5000

* PI (A)= 2x *PI (B)= 1.75x

Project B NPV?

Project A NPV + 5000 = 3000 + 5000 = 8000 (5000 add korlam cos onno project a 5000 besi
invest korte hobe)

FV =5000(1.14)^4

PV=5000