Midterm Quiz #2 March 25.

2021
1. An investment requires a total capital investment P120,000 and a working capital of P10,000. The fixed capital
investment has salvage value of P20, 000 after 5 years. The projected annual cash flow is P44,000 and annual
expenses is P36,000. Determine the Internal rate of return?
a. 28.055% b. 10.219% c.25.68% d. 27.655%

2. A proposed project has a total capital investment of P125,000,000. Twenty percent of which is working capital. The
fixed capital has a service life of 10 years and salvage value P10,000,000. Annual cash flow is P30,000,000. What is the
net present value if the MARR required is 12%?
a. 62.50 b. 52.05 c. 55.78 d. 44.05

3. A company has a fixed capital investment of P125,000,000. The working capital is twenty five percent of the total capital
investment. The fixed capital has a service life of 10 years and salvage value P10 ,000,000. Annual cash flow is
P30,000,000. What is the return on investment?
a. 11.84% b. 28% c. 11.10% d. 20.16%

4. A company has a total capital investment of P125,000,000. Twenty percent of which is working capital. The fixed capital
has a service life of 10 years and salvage value P10,000,000. Annual net profit is P21,000,000. What is the pay-out
period? (nearest value)
a. 2.5 b. 3.0 c. 4.0 d. 5.0

5. How much be should be invested at 12% pa so that an equipment costing P25M can be operated
based on the concept of perpetuity? Annual maintenance cost for the equipment is estimated at P2M
and P5M upkeep every 3 years, service life of 10 years with salvage value assumed to be zero.
a. P40.89M b. P28.54 M c. P65.89 M d. P55.89M

6. Given: Fixed Capital Investment = P400,000

Working capital = P100,000
Service life = 5 years
Salvage value = P50,000
Cost of money = 10% p.a.
Cash flow =P 140,000
What is the Capital Recovery Cost?

a. 108,967 b. 107,329 c. P105,567 d. P110,098