LUNAR INTERNATIONAL COLLEGE

Individual Assignment 1: PROJECT IDENTIFICATION AND APPRAISAL

ABC firm has submitted two project (A and B) proposals to the project identification and
implementation department that estimates with the following projected cash flow statement presented
in Table 1.1 for each project. The figures in the Table are in millions. The discount rates for the two
projects are 15 percent.
Cash 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
flows/Year
Inflows A 0 0 0 60 110 100 95 90 85 70 60 50
B 0 0 50 80 90 70 65 55 50 40 35 30
Outflows A 100 80 75 5 20 5 20 5 20 5 0 0
B 85 65 55 40 35 30 25 15 10 0 0 0

Based on the above information, given that 2020 is the initial period:
A) Which project would suggest for the ABC firm if you were asked to make the project appraisal
based on NPV and IRR approach?
B) Calculate and interpret the payback period for each project.
INSTRUCTIONS:

❖ Answers to be sent by the following email before 12:00 (local time) of February 27, 2021.
LATE SUBMISSIONS WILL NOT BE ACCEPTED.
o lunatmfi@gmail.com
❖ ATTENTION PLEASE: Keep in mind that any submission via telegram account will not be
accepted. Zero marks will be automatically given to those students!!
❖ Any kind of plagiarism has no excuse.
❖ Do not forget writing the subject line while submitting your assignment. The subject line
should be Assignmnettype_Sectionname_coursename. For example, if you are section
MSPM7 student submitting Assignment 1 (Ass1) for Project Identification and
Appraisal (PIA), the subject line for your email should be: Ass1_MSPM7_PIA