FINANCE

ASSIGNMENT

NAME : RAFIA ZAHEER

ROLL NUMBER : 146

SECTION : B

SUBMITTED TO : SIR

SAMIE
 TIME VALUE OF MONEY & CAPITAL BUDGETING
TECHNIQUES ASSIGNMENT

Q1: Solution

PV = 1,800,000

Rs/ - i = 16%

=0.16

n = 4 years

A = P V / P V I FA

i,n A=

1,800,000/2.798
Year Lease rental Interest Principle Principle
A = 643316.65 per
annum (periodic payment) portion repayment outstanding
(10%)

0 - - - 1,800,000

1 643,316.65 288,000 3,553,161.65 1,444,683.35

2 643,316.65 231,149.33 412,167.31 1,032,516.03

3 643,316.65 165,202.56 478,114.09 554,401.94

4 643,316.65 88,704.31 554,612.33 -210

~0
Q2: Solution

i = 16%/4

= 4 % = 0.04

n = 5 years

n*m = 5*4 = 20 periods

Annuity Cash flow = 1,200,000 Rs /-

ICO = 15,000,000 R s/ -

PVIFA = 13.59

Period Description Cash flow DF @ 14% , 20 Present value

0 ICO (15,000,000) 1 (15,000,000)

1-20 Annuity C F 1,200,000 13.59 16,308,000

1,308,000

NPV = 1,308,000 Rs/-

Conclusion : NPV is positive so invest in this project.

Q3: Solution

Discount rate = i = 14.7% = 0.147

ICO = 25 million = 25,000,000

Rs/ -

Annuity cash flow = 9 million = 9,000,000

Rs/ - Period = n-1 =5-1 = 4

PV = A[1+PVIFA i, n-1]

= A[1+{1-(1/(1+i )^n-1)/i}]

= 9,000,000 (1+2.87239)
 = 9,000,000 (3.87239)

= 34,851,510

Period Description Cash flow DF @ 14.7% , 4 PV

0 ICO (25,000,000) 1 (25,000,000)

0-4 Annuity C F 9,000,000 3.87239 34,851,510

9,851,510

NPV = 9,851,510 Rs / -

Conclusion : NPV is positive so invest in this project.