PROJECT A

payback period
0 1 2 3 4
CF 26 5 10 15 20
Cum. 26 21 1
Payback Period 2 year + 1/15 2.06

Dscaount PP
0 1 2 3 4
CF 26 5 10 15 20

PV of 1$ 0.870 0.756 0.658 0.572

PV of CF 5 X 0.870= 4.35 10 X 0.756=7.56 15x 0.658 = 9.87 20X 0.572 =
11.44

Cum. 21.65 14.09 4.22

Disc. PB 3+ 4.22/11.44 3.4

Profitability Index
0 1 2 3 4
CF 26 5 10 15 20

PV of 1$ 0.870 0.756 0.658 0.572

PV of CF 5 X 0.870= 4.35 10 X 0.756=7.56 15 x 0.658 =9.87 20 X 0.572 =
11.44
PV CF 4.35
7.56
9.87
11.44
33.22
Profitability 33.22/26 = PI > 1
Index
1.27

PROJECT B
Payback Period
0 1 2 3 4
CF 26 20 10 8 6
Cum. 26 6
Payback Period 1 year + 6/10 1.6 year
 0 1 2 3 4
CF 26 20 10 8 6
Cum. 26 6
Payback Period 1 year + 6/10 1.6 year
Discaount Payback
0 1 2 3 4
CF 26 20 10 8 6

PV of 1$ 0.870 0.756 0.658 0.572

PV of CF 20 X 0.870= 10 X 0.756=7.56 8 x 0.658 = 5.26 6 X 0.572 = 3.43
17.4

Cum. 8.6 1.04

Disc. PB 2+ 1.04/5.26 2.2

Profitability Index
0 1 2 3 4
CF 26 20 10 8 6

PV of 1$ 0.870 0.756 0.658 0.572

PV of CF 20 X 0.870= 10 X 0.756=7.56 8 x 0.658 = 5.26 6 X 0.572 = 3.43
17.4
PV CF 17.4
7.56
5.26
3.43
33.65
Profitability 33.65/26 = PI > 1
Index
1.29
b. if project A and B are independent , so we can accept both because the NPV>0
c. if project A and B are mutually exclusive, accept A because NPVa>NPVb
 2 3 4 NPV RATE
10 15 20 10%
Periode cashflow
1
0 $(26.00)
06
1 5
2 10
3 15
3 4 4 20

15 20
NPV $ 11.74
IRR 25%
0.658 0.572
MIRR 21%
56=7.56 15x 0.658 = 9.87 20X 0.572 = NPV>0, IRR>WACC the meaning is project
11.44 can accept

4.22
4.22/11.44 3.4

3 4
15 20

0.658 0.572
56=7.56 15 x 0.658 =9.87 20 X 0.572 =
11.44

2 3 4
10 8 6
 2 3 4
NPV RATE
10 8 6
10%
Periode cashflow
0 $(26.00)
1 20
3 4 2 10
3 8
8 6 4 6

NPV $ 10.55
0.658 0.572
IRR 33%
56=7.56 8 x 0.658 = 5.26 6 X 0.572 = 3.43
MIRR 20%
NPV>0, IRR>WACC the meaning is project
can accept

2.2

3 4
8 6

0.658 0.572
56=7.56 8 x 0.658 = 5.26 6 X 0.572 = 3.43

cept both because the NPV>0

because NPVa>NPVb