VU MGT201 Assignment 1 Solution Spring 2013 (2-5-2013)
idea solution :
Initial Investment = 500,000
Year 1 Investment = 800,000
Year 2 Invesment = 150,000
Year 3 Investment = 200,000
Year 4 Investment = 250,000
Year 5 Investment = 300,000
5 to 10 year (each year investment) = 300,000
Payback Period = In this technique, we try to figure out how long it would take to recover the invested capital through positive cash flows of the business.
Present Value = Discounted the future value NPV=-IO+ΣCFt/ (1+i) t
IRR (Internal Rate of Retern) = NPV of the project is equal to 0.
NPV= -IO +CF1/ (1+IRR) + CF2/ (1+IRR) 2