Financial Analysis

Fiancial Analysis

1.

Year

Cash Flow

1

$418,760

2

-217,645

3

700,031

4

946,314

5

826,522

What is the NPV if the discount rate is 16.36 percent?

NPV is $

Solution:

NPV= [R1/(1+i)1+ R2/(1+i)2 +R3/(1+i)3 +R4/(1+i)4 +R4/(1+i)4 +R5/(1+i)5 ]-Investment

R1= 418760

R2= -217645

R3= 700031

R4= 946314

R5= 862522

i =16.36% = 0.1635

Investment = 1889515

Solution:

NPV = [418760/(1.163)1+ (-217645)/(1.163)2 +70031/(1.163)3+946314/(1.163)4 + 826522/(1.163)5] - 1889515

= -339356.94

2.

a. NPV $

Solutio:

Investment= 12.2m

n = 10 years

Revenue/year = 2m

tax = 35%

cost of capital = 10%

FV(1+i)n =[R1/(1+i)1+ R2/(1+i)2…….. R10/(1+i)10]

R1 = 2000000

R2 = 2000000

R3 = 2000000

.

.

.

.

.

.

.

.

R10 = 2000000

i= 10%

Total revenue = 10801531.17

5240000-241000000 = 2830000

2830000/ (1.1)10 = 1091087.5

10801531.17+1091087.5=11892618.67

11892618.67 - 12200000 = 10692618.67

3.

Year

Cost

Value of Future Savings

(at time of purchase)

0

$5,000

$7,000

1

4,700

7,000

2

4,400

7,000

3

4,100

7,000

4

3,800

7,000

5

3,500

7,000

Calculate the NPV of each choice below.

a. NPV0 $

b. ...