The document contains a letter transmitting an assignment on capital budgeting techniques. It includes an introduction thanking the recipient for guidance on the assignment and noting efforts were made to complete it meaningfully. It also contains an acknowledgement section thanking those who provided assistance and guidance. Finally, it includes an executive summary outlining two math problems completed as part of the assignment analyzing capital budgeting techniques like NPV, IRR, MIRR for investment decisions.
Business Proposal Powerpoint Presentation SlidesSlideTeam
Requests for business proposals are one of the most effective ways to generate and convert leads. It does the job tremendously well when it comes to sales optimization. However, preparing a business proposition requires skill, effort, and experience. Documenting the right things in the right proportion is the secret to a responsive proposal. As professional PowerPoint template innovators, SlideTeam has designed 1M+ templates. Our latest addition will satisfy the responsive business proposal needs of entrepreneurs across all domains. Whether solicited or unsolicited, you can use these business Proposal Powerpoint Presentation Slides to convert every opportunity. All the templates in this deck are designed in alignment with the industry specifics. Research experts gather the data featured in our PPT slideshow. It is then passed on to the designers, who use state-of-the-art tools to organize the content in a visually gripping manner. The cover letter included in this PowerPoint layout will present the whole project in a nutshell. Present a crisp executive summary by highlighting your services/products, business vision, and value proposition. Our business offer PPT format gives to access to infographic-style slides. Further, showcase the background of the business project. Present the problem statement and solution for the commercial business proposal. With the help of a labeled diagram represent the time duration of each business project activity. Utilize the tabular layout to illustrate the cost estimate for business activity. Elucidate the business project benefits like cost avoidance, productivity, and revenue. Familiarize your clients with your organization. Introduce your team for the project, along with their roles and responsibilities. Maintain business transparency by showcasing all the terms and conditions. This includes initial setup, monthly fee, cancellation, and more. Communicate the forthcoming steps involved in successfully delivering the project. You can brief about the budget approval, fund posting, and project plan finalization. So, hit the download icon to begin instant personalization. https://bit.ly/2RQlN26
Business Proposal PowerPoint Presentation SlidesSlideTeam
If your company needs to submit a Business Proposal PowerPoint Presentation Slides look no further. Our researchers have analyzed thousands of proposals on this topic for effectiveness and conversion. Just download our template, add your company data and submit to your client for a positive response. https://bit.ly/38L9TdX
This presentation explains the Capital Budgeting Techniques including Payback Period, NPV, IRR, Modified IRR, Profitability Index. It further explains the capital budgeting process and the types of projects
Proposal For Business Trade PowerPoint Presentation SlidesSlideTeam
If your company needs to submit a Proposal For Business Trade PowerPoint Presentation Slides look no further. Our researchers have analyzed thousands of proposals on this topic for effectiveness and conversion. Just download our template, add your company data and submit to your client for a positive response. https://bit.ly/2WsVWg9
Business Proposal Powerpoint Presentation SlidesSlideTeam
Requests for business proposals are one of the most effective ways to generate and convert leads. It does the job tremendously well when it comes to sales optimization. However, preparing a business proposition requires skill, effort, and experience. Documenting the right things in the right proportion is the secret to a responsive proposal. As professional PowerPoint template innovators, SlideTeam has designed 1M+ templates. Our latest addition will satisfy the responsive business proposal needs of entrepreneurs across all domains. Whether solicited or unsolicited, you can use these business Proposal Powerpoint Presentation Slides to convert every opportunity. All the templates in this deck are designed in alignment with the industry specifics. Research experts gather the data featured in our PPT slideshow. It is then passed on to the designers, who use state-of-the-art tools to organize the content in a visually gripping manner. The cover letter included in this PowerPoint layout will present the whole project in a nutshell. Present a crisp executive summary by highlighting your services/products, business vision, and value proposition. Our business offer PPT format gives to access to infographic-style slides. Further, showcase the background of the business project. Present the problem statement and solution for the commercial business proposal. With the help of a labeled diagram represent the time duration of each business project activity. Utilize the tabular layout to illustrate the cost estimate for business activity. Elucidate the business project benefits like cost avoidance, productivity, and revenue. Familiarize your clients with your organization. Introduce your team for the project, along with their roles and responsibilities. Maintain business transparency by showcasing all the terms and conditions. This includes initial setup, monthly fee, cancellation, and more. Communicate the forthcoming steps involved in successfully delivering the project. You can brief about the budget approval, fund posting, and project plan finalization. So, hit the download icon to begin instant personalization. https://bit.ly/2RQlN26
Business Proposal PowerPoint Presentation SlidesSlideTeam
If your company needs to submit a Business Proposal PowerPoint Presentation Slides look no further. Our researchers have analyzed thousands of proposals on this topic for effectiveness and conversion. Just download our template, add your company data and submit to your client for a positive response. https://bit.ly/38L9TdX
This presentation explains the Capital Budgeting Techniques including Payback Period, NPV, IRR, Modified IRR, Profitability Index. It further explains the capital budgeting process and the types of projects
Proposal For Business Trade PowerPoint Presentation SlidesSlideTeam
If your company needs to submit a Proposal For Business Trade PowerPoint Presentation Slides look no further. Our researchers have analyzed thousands of proposals on this topic for effectiveness and conversion. Just download our template, add your company data and submit to your client for a positive response. https://bit.ly/2WsVWg9
Proposal For Business Venture PowerPoint Presentation SlidesSlideTeam
If your company needs to submit a Proposal For Business Venture PowerPoint Presentation Slides look no further. Our researchers have analyzed thousands of proposals on this topic for effectiveness and conversion. Just download our template, add your company data and submit to your client for a positive response. https://bit.ly/2AscA7f
#PMP Formulae @ a Glance By SN Panigrahi
EssAnnPee Business Solutions,
#PMP
Project Selection Methods,
Opportunity Cost,
Sunk cost,
Depreciation,
PMP Formulae - Schedule Management,
Time Duration Estimates,
Three Point Estimate,
Float or Slack,
Free Float,
PMP Formulae -Cost Management,
Cost Baseline,
Earned Value Management,
EVM Method,
Quality Management,
Communication Management,
Risk Management,
Expected Monetary Value (EMV),
Procurement Management,
Types of Contracts,
Point of Total Assumption (PTA)
The Fixed Asset Expenditure PowerPoint Presentation Slides are designed to represent financial planning and performance management. Capital expenditure PowerPoint complete deck covers all the PPT slides which are necessary for financial presentations such as capex summary, capital expenditure details, and valuation methods, discounted payback period, valuation summary, net present value method, NPV advantages and disadvantages, internal rate of return, valuation methods comparison, etc. Each component given in slides can be easily modified to meet specific needs. Capital Investment PowerPoint layout is ideal for finance and accounting presentations. Furthermore, fixed investment PowerPoint templates are useful for cash flow analysis, capital asset management, operating expenses, balance sheet, income statement, corporate finance, capital cost management, accounting reports, financial planning and forecasting, capital and revenue expenditure and many more. Download PowerPoint presentation of financial statements for financial analysis and business valuation. Our Fixed Asset Expenditure PowerPoint Presentation Slides are great confidence builders. Convince everyone they are capable of achieving.
Presenting this set of slides with name - Tangible Assets Expenditure PowerPoint Presentation Slides. This is a one stage process. The stages in this process are Tangible Assets Expenditure, Fixed Assets Expenditure, Property, Plant And Equipment.
A presentation of Agile for a group of Project Managers. Key point of discussion were why Agile, the Scrum framework, values and the transition/role of the traditional Project Manager in an Agile setup.
"You can download this product from SlideTeam.net"
If your company needs to submit a Commercial Proposal Powerpoint Presentation Slides look no further. Our researchers have analyzed thousands of proposals on this topic for effectiveness and conversion. Just download our template, add your company data and submit to your client for a positive response. https://bit.ly/3f3AJCd
The COVID economy has likely created competing priorities for you as a business leader. You feel pressure to minimize your compensation expense and protect cash flow. At the same time, you need to incentivize employee performance so your people will be motivated to get results.
So, what should you do?
Tune into this webcast to learn why many enterprise leaders are finding phantom stock to be the answer. In this broadcast, we will show you how this kind of plan enables you to reward performance without increasing your compensation expense. You will also see how phantom stock allows you to share value without diluting owner equity.
In short, we will demonstrate why phantom stock is the compensation equivalent of “having your cake and eating it too.”
If your company needs to submit a Commercial Proposal PowerPoint Presentation Slides look no further. Our researchers have analyzed thousands of proposals on this topic for effectiveness and conversion. Just download our template, add your company data and submit to your client for a positive response. http://bit.ly/39Zrb74
Talking to the C-Suite: Building a Business Case for Employee Development and...BizLibrary
When presenting a proposed training program to senior leadership, don’t make the mistake of getting caught only discussing the ROI. Executives expect something much different in a true business case. In this webinar we’ll cover the basic 5 elements to include in your business case for employee training:
1. Scenario analysis – most likely outcomes, best case and worst case.
2. Link each expected benefit of the solution to an expected operational effect.
3. Identify the KPI (key performance indicator) for each benefit.
4. State the risk of not taking the proposed action.
5. Align proposal with organization’s strategic goals.
www.bizlibrary.com
Proposal For Business Venture PowerPoint Presentation SlidesSlideTeam
If your company needs to submit a Proposal For Business Venture PowerPoint Presentation Slides look no further. Our researchers have analyzed thousands of proposals on this topic for effectiveness and conversion. Just download our template, add your company data and submit to your client for a positive response. https://bit.ly/2AscA7f
#PMP Formulae @ a Glance By SN Panigrahi
EssAnnPee Business Solutions,
#PMP
Project Selection Methods,
Opportunity Cost,
Sunk cost,
Depreciation,
PMP Formulae - Schedule Management,
Time Duration Estimates,
Three Point Estimate,
Float or Slack,
Free Float,
PMP Formulae -Cost Management,
Cost Baseline,
Earned Value Management,
EVM Method,
Quality Management,
Communication Management,
Risk Management,
Expected Monetary Value (EMV),
Procurement Management,
Types of Contracts,
Point of Total Assumption (PTA)
The Fixed Asset Expenditure PowerPoint Presentation Slides are designed to represent financial planning and performance management. Capital expenditure PowerPoint complete deck covers all the PPT slides which are necessary for financial presentations such as capex summary, capital expenditure details, and valuation methods, discounted payback period, valuation summary, net present value method, NPV advantages and disadvantages, internal rate of return, valuation methods comparison, etc. Each component given in slides can be easily modified to meet specific needs. Capital Investment PowerPoint layout is ideal for finance and accounting presentations. Furthermore, fixed investment PowerPoint templates are useful for cash flow analysis, capital asset management, operating expenses, balance sheet, income statement, corporate finance, capital cost management, accounting reports, financial planning and forecasting, capital and revenue expenditure and many more. Download PowerPoint presentation of financial statements for financial analysis and business valuation. Our Fixed Asset Expenditure PowerPoint Presentation Slides are great confidence builders. Convince everyone they are capable of achieving.
Presenting this set of slides with name - Tangible Assets Expenditure PowerPoint Presentation Slides. This is a one stage process. The stages in this process are Tangible Assets Expenditure, Fixed Assets Expenditure, Property, Plant And Equipment.
A presentation of Agile for a group of Project Managers. Key point of discussion were why Agile, the Scrum framework, values and the transition/role of the traditional Project Manager in an Agile setup.
"You can download this product from SlideTeam.net"
If your company needs to submit a Commercial Proposal Powerpoint Presentation Slides look no further. Our researchers have analyzed thousands of proposals on this topic for effectiveness and conversion. Just download our template, add your company data and submit to your client for a positive response. https://bit.ly/3f3AJCd
The COVID economy has likely created competing priorities for you as a business leader. You feel pressure to minimize your compensation expense and protect cash flow. At the same time, you need to incentivize employee performance so your people will be motivated to get results.
So, what should you do?
Tune into this webcast to learn why many enterprise leaders are finding phantom stock to be the answer. In this broadcast, we will show you how this kind of plan enables you to reward performance without increasing your compensation expense. You will also see how phantom stock allows you to share value without diluting owner equity.
In short, we will demonstrate why phantom stock is the compensation equivalent of “having your cake and eating it too.”
If your company needs to submit a Commercial Proposal PowerPoint Presentation Slides look no further. Our researchers have analyzed thousands of proposals on this topic for effectiveness and conversion. Just download our template, add your company data and submit to your client for a positive response. http://bit.ly/39Zrb74
Talking to the C-Suite: Building a Business Case for Employee Development and...BizLibrary
When presenting a proposed training program to senior leadership, don’t make the mistake of getting caught only discussing the ROI. Executives expect something much different in a true business case. In this webinar we’ll cover the basic 5 elements to include in your business case for employee training:
1. Scenario analysis – most likely outcomes, best case and worst case.
2. Link each expected benefit of the solution to an expected operational effect.
3. Identify the KPI (key performance indicator) for each benefit.
4. State the risk of not taking the proposed action.
5. Align proposal with organization’s strategic goals.
www.bizlibrary.com
Students, digital devices and success - Andreas Schleicher - 27 May 2024..pptxEduSkills OECD
Andreas Schleicher presents at the OECD webinar ‘Digital devices in schools: detrimental distraction or secret to success?’ on 27 May 2024. The presentation was based on findings from PISA 2022 results and the webinar helped launch the PISA in Focus ‘Managing screen time: How to protect and equip students against distraction’ https://www.oecd-ilibrary.org/education/managing-screen-time_7c225af4-en and the OECD Education Policy Perspective ‘Students, digital devices and success’ can be found here - https://oe.cd/il/5yV
How to Create Map Views in the Odoo 17 ERPCeline George
The map views are useful for providing a geographical representation of data. They allow users to visualize and analyze the data in a more intuitive manner.
Ethnobotany and Ethnopharmacology:
Ethnobotany in herbal drug evaluation,
Impact of Ethnobotany in traditional medicine,
New development in herbals,
Bio-prospecting tools for drug discovery,
Role of Ethnopharmacology in drug evaluation,
Reverse Pharmacology.
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
How to Split Bills in the Odoo 17 POS ModuleCeline George
Bills have a main role in point of sale procedure. It will help to track sales, handling payments and giving receipts to customers. Bill splitting also has an important role in POS. For example, If some friends come together for dinner and if they want to divide the bill then it is possible by POS bill splitting. This slide will show how to split bills in odoo 17 POS.
The Indian economy is classified into different sectors to simplify the analysis and understanding of economic activities. For Class 10, it's essential to grasp the sectors of the Indian economy, understand their characteristics, and recognize their importance. This guide will provide detailed notes on the Sectors of the Indian Economy Class 10, using specific long-tail keywords to enhance comprehension.
For more information, visit-www.vavaclasses.com
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
The French Revolution Class 9 Study Material pdf free download
Capital Budgeting Techniques
1.
2. Letter of Transmittal
26 December, 2017
Ms. Nasima Khatun
Lecturer
School of Business Studies
Southeast University
Subject: Submission of assignment.
Dear Madam,
Here is the assignment that we assigned on the topic as per your request. The assignment
has been completed by the knowledge that we have gathered from the course “Financial
Management, Course Code- FIN2122”. It is a great pleasure for us to present the
assignment on case study.
We are thankful to all those persons who provided us important information and gave
us valuable advices. We would be happy if you read the assignment carefully and will
be trying to answer all the analysis & solution the assignment.
We have tried our label best to complete this assignment meaningfully and correctly, as
much as possible. We believe that our tiresome effort will help you to get ahead with
this sort of venture. In this case it will be meaningful to us. However, if you need any
assistance in interpreting this assignment please contact with us.
Lastly we would be thankful once again if you please give your judicious advice on
effort.
Sincerely yours,
Shakir Mahmud Shourav
“On behalf of our group”
3. Acknowledgement
In performing our assignment, we had to take the help and guideline of some respected
persons, who deserve our greatest gratitude. The completion of this assignment gives
us much pleasure. We would like to show my gratitude Ms. Nasima Khatun, Lecturer,
Southeast University for giving us a good guideline for assignment throughout
numerous consultations. Her valuable suggestions was of immense help throughout our
project work. Her perceptive criticism kept us working to make this project in a much
better way. Working under her was an extremely knowledgeable experience for ours.
We would also like to expand our deepest gratitude to all those who have directly and
indirectly guided us in writing this assignment.
Many people, especially our classmates and team members itself, have made valuable
comment suggestions on this proposal which gave us an inspiration to improve our
assignment. We thank all the people for their help directly and indirectly to complete
our assignment.
4. Executive Summary
Capital Budgeting Technique is the process of making with respect to specific
investment- that is, should a proposed project be accepted or rejected. The techniques
is used for the acceptance or rejection of a project. It is important for a business to
calculate capital budgeting technique for better and profitable investment. The popular
equations for calculating capital budgeting techniques are NPV, DCF, IRR, MIRR,
NPV Profile etc.
We have prepared two maths of capital budgeting technique and calculate NPV, DCF,
IRR, MIRR, NPV profile. And then justify the answers. The short summary of the maths
are given below-
Math- 1
In this math, a company invested two products. We have accepted Air Conditioner for
mutually exclusive investment based on the results of NPV, IRR, MIRR. For
independent project, we have choose both Air Conditioner and Refrigerator.
Math-2
A furniture company has invested 2 products for 3 years. Based on the results of NPV,
IRR, MIRR, we have accepted Sofa for mutually exclusive projects. But we have
chosen both products when the both investment are mutually exclusive.
5. Introduction
Hopefully we have presented you our assignment on a case study. Actually our
assignment also refers the topic “Capital Budgeting Techniques”. We have made the
assignment as you had given us to analyse by help of your suggestions.
We assign the assignment to analyze capital budgeting technique on financial
investment and decision making.. This assignment helps ours to get new experience for
preparing it.
For this, we have prepared two capital budgeting maths and tries to interpret the results
of the maths. For this we have analyzed DCF (Discounted Cash Flow), NPV (Net
Present Value), IRR (Internal Rate of Return), MIRR (Modified Internal Rate of
Return). Then we have to interpret the results. We have also made a decision according
to the higher probability of acceptance. We have identified which project/products is
the best for investment. Finally we have constructed NPV profile.
We believe that the knowledge and experience we gathered during the assignment will
extremely helpful in our future professional and academic life. We will be grateful to
you if you accept the assignment.
6. Math-1
Walton Company is considering two products with new model, refrigerator & air
conditioner. The company has invested initial investment at Tk5000000 for both
projects. The company’s cost of capital is 18%. In this case, the estimated cash flows
of 5 years are given below-
Refrigerator Air Conditioner
2013 2000000 1800000
2014 1000000 2000000
2015 1900000 1300000
2016 1500000 2500000
2017 2000000 1000000
The financial manager of the company has wanted to know the investment decision of
the two products. Calculate and interpret the following-
(1) DCF
(2) NPV
(3) IRR
(4) MIRR
(5) Justify the answers
(6) NPV Profile
Solution-
(1) DCF (Discounted Cash Flow)
For Product Refrigerator, DCFR =∑PVCIF
=∑
𝐶𝐼𝐹
(1+𝑟) 𝑛
=
2000000
(1+0.18)1
+
1000000
(1+0.18)2
+
1900000
(1+0.18)3
+
1500000
(1+0.18)4
+
2000000
(1+0.18)5
8. For Air Conditioner, NPVAC =∑PVCIF-ICO
=∑
𝐶𝐼𝐹
(1+𝑟) 𝑛
-5000000
=
1800000
(1+0.18)1
+
2000000
(1+0.18)2
+
1300000
(1+0.18)3
+
2500000
(1+0.18)4
+
1000000
(1+0.18)5
-5000000
=
1800000
1.181
+
2000000
1.182
+
1300000
1.183
+
2500000
1.184
+
1000000
1.185
-5000000
=(1525423.729+1436368.86+791220.134+1289472.188+437109.216)-
5000000
=5479594.127-5000000
=479594.127
Interpretation- NPV is the difference between the present value of future cash flow
from an investment and the amount of investment. The net present value of Air
Conditioner of five years is much higher than refrigerator.
(3) IRR (Internal Rate of Return)=
For Refrigerator, Lower Rate (LR)=18%
Assume that, Higher Rate (HR)=30%
So, the value of NPV when r=30%=0.30 is-
=
2000000
(1+0.30)1
+
1000000
(1+0.30)2
+
1900000
(1+0.30)3
+
1500000
(1+0.30)4
+
2000000
(1+0.30)5
-5000000
=
2000000
1.301
+
1000000
1.302
+
1900000
1.303
+
1500000
1.304
+
2000000
1.305
-5000000
=(1538461.538+591715.976+864815.657+525191.695+538658.148)-5000000
=4058843.014-5000000
=-941156.986
IRRR = LR+
𝑁𝑃𝑉(𝐿𝑅)
𝑁𝑃𝑉(𝐿𝑅)−𝑁𝑃𝑉(𝐻𝑅)
𝑥(𝐻𝑅 − 𝐿𝑅)
= 0.18+
217400.085
217400.085−(−941156.986)
𝑥(0.30 − 0.18)
=0.2025176
9. =20.25176%
For Air Conditioner , Lower Rate (LR)=18%
Assume that, Higher Rate (HR)=30%
So, the value of NPV when r=30%=0.30 is-
=
1800000
(1+0.30)1
+
2000000
(1+0.30)2
+
1300000
(1+0.30)3
+
2500000
(1+0.30)4
+
1000000
(1+0.30)5
-5000000
=
1800000
1.301
+
2000000
1.302
+
1300000
1.303
+
2500000
1.304
+
1000000
1.305
-5000000
=(1384615.385+1183431.953+591715.976+875319.4916+269329.074)-
5000000
=4304411.88-5000000
=-695588.120
IRRAC = LR+
𝑁𝑃𝑉(𝐿𝑅)
𝑁𝑃𝑉(𝐿𝑅)−𝑁𝑃𝑉(𝐻𝑅)
𝑥(𝐻𝑅 − 𝐿𝑅)
= 0.18+
479594.127
479594.127−(−695588.120)
𝑥(0.30 − 0.18)
=0.2289722
=22.89722%
Interpretation- IRR is the return that makes NPV=0. We have seen that the rate of IRR
of Air Conditioner is higher than Refrigerator.
(4) MIRR(Modified Internal Rate of Return)=
For Refrigerator=MIRRR= √
𝑇𝑉
𝑃𝑉 𝑜𝑓 𝐶𝑜𝑠𝑡
𝑛
− 1
TVR =∑CIF(1+r)n
=2000000(1 + 0.18)4
+1000000(1 + 0.18)3
+ 1900000(1 + 0.18)2
+
1500000(1 + 0.18)1
+ 2000000(1 + 0.18)0
=11936147.52
10. So, MIRRR = √
𝑇𝑉
𝑃𝑉 𝑜𝑓 𝐶𝑜𝑠𝑡
𝑛
− 1
=√
11936147.52
5000000
5
− 1
=1.19008-1
=0.19008
=19.008%
For Air Coordinator=MIRRAC= √
𝑇𝑉
𝑃𝑉 𝑜𝑓 𝐶𝑜𝑠𝑡
𝑛
− 1
TVAC =∑CIF(1+r)n
=1800000(1 + 0.18)4
+2000000(1 + 0.18)3
+ 1300000(1 + 0.18)2
+
2500000(1 + 0.18)1
+ 1000000(1 + 0.18)0
=12535983.97
So, MIRRAC = √
𝑇𝑉
𝑃𝑉 𝑜𝑓 𝐶𝑜𝑠𝑡
𝑛
− 1
=√
12535983.97
5000000
5
− 1
=1.20181-1
=0.20181
=20.181%
Interpretation- MIRR compares the future value of cash flows with the cost of the
project. We have seen that the MIRR of Air Conditioner is higher than the MIRR rate
of Refrigerator.
11. (5) Justify the Answer-
The NPV, IRR, MIRR of both products are given below-
Refrigerator Air Conditioner
NPV 217400.085 479594.127
IRR 20.25176% 22.89722%
MIRR 19.008% 20.181%
Initially if NPV>0, we can accept for investment. We have seen that both products’
NPV are above 0. So we can accept both products’ investment. If IRR>r & MIRR>r,we
can also accept the project. Bust we also have seen that the IRR and MIRR rate of both
products are higher than r(18%). So we can accept both investment.
If the investments are independent we can accept both products.
If the investments are mutually exclusive we can accept only Air Conditioner.
Because when the rate is higher, the acceptance is higher. We have seen that the
rate of NPV, IRR, MIRR of Air Conditioner is higher than Refregerator. So
Walton Company will get higher return if they invest for refrigerator.
(6) Construct NPV Profile-
For Refrigerator-
NPV r
217400.085 18%
-941156.986 30%
0 20.25176%
12. For Air Conditioner-
NPV r
479594.127 18%
-695588.120 30%
0 22.89722%
-10000
-5000
0
5000
10000
15000
20000
25000
14% 35.55% 40%
NPV
Required Rate of Return
NPV Profile
-10000
-5000
0
5000
10000
15000
20000
25000
14% 35.55% 40%
NPV
Required Rate of Return
NPV Profile
13. Math-2
Assume that you are a financial analyst of Hatil Furniture Ltd. The manager of the
company has asked to analyze two new proposal investment decision. One investment
is for the product “Sofa” and the other investment is for product “Dining Table” The
cost of the both project is TK60000 and the cost of capital is 14%. The expected net
cash flows from 2015 to 2017 are given below-
Sofa Dining table
2015 50500 35000
2016 25000 35000
2017 35500 35000
Calculate the following and identify which product’s investment is mostly profitable -
(1) DCF
(2) NPV
(3) IRR
(4) MIRR
(5) Justify the answers
(6) NPV Profile
Solution-
(1) DCF Discounted Cash Flow)
For Product “Sofa”, DCFS =∑PVCIF
=∑
𝐶𝐼𝐹
(1+𝑟) 𝑛
=
50500
(1+0.14)1
+
25000
(1+0.14)2
+
35500
(1+0.14)3
=44298.245+19236.688+23961.488
=87496.421
For Product “Dining Table”, DCFDT =∑PVCIF
=∑
𝐶𝐼𝐹
(1+𝑟) 𝑛
14. =
35000
(1+0.14)1
+
35000
(1+0.14)2
+
35000
(1+0.14)3
=30701.754+26931.363+23624.003
=81257.12
Interpretation: DCF entails estimating cash flow. The DCF of the product “Sofa” is
higher than the product “Dining Table”.
(2) NPV(Net Present Value)
For Sofa, NPVS =∑PVCIF-ICO
=∑
𝐶𝐼𝐹
(1+𝑟) 𝑛
-60000
=
50500
(1+0.14)1
+
25000
(1+0.14)2
+
35500
(1+0.14)3
-60000
=87496.421-60000
=27496.521
For Dining Table, NPVDT =∑PVCIF-ICO
=∑
𝐶𝐼𝐹
(1+𝑟) 𝑛
-60000
=
35000
(1+0.14)1
+
35000
(1+0.14)2
+
35000
(1+0.14)3
-60000
=81257.12-60000
=21257.12
Interpretation- NPV is the difference between the present value of future cash flow
from an investment and the amount of investment. The net present value of Sofa of
three years is much higher than the other one.
(3) IRR (Internal Rate of Return)=
For Sofa, Lower Rate (LR)=14%
Assume That, Higher Rate (HR)=45%
So the NPV would be when r=45%=0.45-
16. =0.35551
=35.551%
Interpretation- IRR is the return that makes NPV=0. We have seen that the rate of IRR
of Sofa (43.258%) is much higher than Dining Table (35.551%).
(4) MIRR (Modified Internal Rate of Return)=
For Sofa=MIRRS= √
𝑇𝑉
𝑃𝑉 𝑜𝑓 𝐶𝑜𝑠𝑡
𝑛
− 1
TVS =∑CIF(1+r)n
=50500(1 + 0.14)2
+25000(1 + 0.14)1
+ 35500(1 + 0.14)0
=129629.8
MIRRS = √
𝑇𝑉
𝑃𝑉 𝑜𝑓 𝐶𝑜𝑠𝑡
𝑛
− 1
=√
129629.8
60000
3
− 1
=1.29275-1
=0.29275
=29.275%
For Dining Table =MIRRDT= √
𝑇𝑉
𝑃𝑉 𝑜𝑓 𝐶𝑜𝑠𝑡
𝑛
− 1
TVDT =∑CIF(1+r)n
=35000(1 + 0.14)2
+35000(1 + 0.14)1
+ 35000(1 + 0.14)0
=120386
17. MIRRDT = √
𝑇𝑉
𝑃𝑉 𝑜𝑓 𝐶𝑜𝑠𝑡
𝑛
− 1
=√
120386
60000
3
− 1
=1.26127-1
=0.26127
=26.127%
Interpretation- MIRR compares the future value of cash flows with the cost of the
project. We have seen that the MIRR of Sofa (29.275%) is higher than the MIRR rate
of Dining Table (26.127%).
(5) Justify the Answer-
The NPV, IRR, MIRR of both products are given below-
Sofa Dining Table
NPV 27496.521 21257.12
IRR 43.257% 35.551%
MIRR 29.275% 26.127%
Initially if NPV>0, we can accept for investment. We have seen that both products’
NPV are above 0. So we can accept both products’ investment. If IRR>r &
MIRR>r,we can also accept the project. Bust we also have seen that the IRR and
MIRR rate of both products are higher than r(14%). So we can accept both
investment.
If the investments are independent we can accept both products.
If the investments are mutually exclusive we can accept only Sofa. Because
when the rate is higher, the acceptance is higher. We have seen that the rate of
NPV, IRR, MIRR of Sofa is higher than Dining Table. So Company will get
higher return if they invest for Sofa.