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  • Quiz 4-Ch4-Investment Apprasal Method

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    Chheuy Sok Lin
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    This document provides information to calculate the net present value (NPV) and internal rate of return (IRR) for two potential machine investments, Machine A and Machine B. It lists the cash flows for each machine over several years and asks the reader to calculate the NPV for each by applying the given discount factors and determining which machine option has a higher NPV. It also provides cash flow information for Machine A to calculate its IRR.

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    This document provides information to calculate the net present value (NPV) and internal rate of return (IRR) for two potential machine investments, Machine A and Machine B. It lists the cash flows for each machine over several years and asks the reader to calculate the NPV for each by applying the given discount factors and determining which machine option has a higher NPV. It also provides cash flow information for Machine A to calculate its IRR.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    4 views1 page

    Quiz 4-Ch4-Investment Apprasal Method

    Uploaded by

    Chheuy Sok Lin
    This document provides information to calculate the net present value (NPV) and internal rate of return (IRR) for two potential machine investments, Machine A and Machine B. It lists the cash flows for each machine over several years and asks the reader to calculate the NPV for each by applying the given discount factors and determining which machine option has a higher NPV. It also provides cash flow information for Machine A to calculate its IRR.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Quiz 4- Ch4 : Investment Appraisal Method

    1. Find the NPV of the two project (10 marks)

    Initial Investment Cost = 80000

    Year Discount Machine A Machine B


    Factors
    (12%) Cash Flow P.V ($) Cash Flow P.V ($)
    1 ? 24000 ? 8000 ?
    2 ? 32000 ? 24000 ?
    3 ? 40000 ? 32000 ?
    4 ? 24000 ? 48000 ?
    5 ? 16000 ? 32000 ?
    6 ? 22000 ? 22000 ?
    7 ? 20000 ? 20000 ?
    ? ?

    What option should you buy ? Why?

    2. Find the Internal Rate of Return (IRR) (10 marks)


    Initial Investment Cost = 1000

    Year Discount Machine A


    Factors
    (12%) Cash Flow P.V ($)
    1 ? 5000 ?
    2 ? 2000 ?
    3 ? 2000 ?
    4 ? 3000 ?
    ?

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