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    Priyesh Solkar
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    This document presents a cash flow analysis for a 5-year project. It shows the cash inflows and outflows for each year of the project (Y1 through Y5) including revenues, costs, depreciation, taxes, and salvage value. The net present value is calculated to be Rs. 273.69, indicating a positive NPV and that the project is viable and can be undertaken. Additional metrics like the profitability index and net benefit cost ratio further support accepting the project since they are above 1.

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    This document presents a cash flow analysis for a 5-year project. It shows the cash inflows and outflows for each year of the project (Y1 through Y5) including revenues, costs, depreciation, taxes, and salvage value. The net present value is calculated to be Rs. 273.69, indicating a positive NPV and that the project is viable and can be undertaken. Additional metrics like the profitability index and net benefit cost ratio further support accepting the project since they are above 1.

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    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
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    6 views2 pages

    2006 Cash Flow Prob Soln

    Uploaded by

    Priyesh Solkar
    This document presents a cash flow analysis for a 5-year project. It shows the cash inflows and outflows for each year of the project (Y1 through Y5) including revenues, costs, depreciation, taxes, and salvage value. The net present value is calculated to be Rs. 273.69, indicating a positive NPV and that the project is viable and can be undertaken. Additional metrics like the profitability index and net benefit cost ratio further support accepting the project since they are above 1.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 2

    University Prob no 2

    Year 2006

    (20 marks)

    Soln
    Sr no
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10
    11
    12
    13
    14
    15
    16
    17

    Description
    Y0
    Invt ( 2 + 3 )
    Plant & M/c
    Working capt
    Revenues
    Costs Other than Int & Depn
    Depn @ 20 % WDV of (2)
    PBT (4 - 5 - 6)
    Tax @30 % of (7)
    PAT (7 -8)
    Operating Cash Flow (PAT +
    Depn)
    Terminal Benefits
    Salvage Value
    Recovery of working capital
    PVIF @10% (From given tables)
    PV Inflow
    Total PV Inflow
    NPV (16 -1)

    Y1

    CASH FLOWS IN YEAR (Rs)


    Y2
    Y3
    Y4

    Y5

    -300
    -100
    440
    250
    60
    130
    39
    91

    440
    250
    48
    142
    42.6
    99.4

    440
    250
    38.4
    151.6
    45.48
    106.12

    440
    250
    30.72
    159.28
    47.784
    111.496

    440
    250
    24.58
    165.42
    49.626
    115.794

    151

    147.4

    144.52

    142.216

    140.374

    96
    100
    0.909
    0.826
    0.7513
    0.683
    0.621
    137.2727 121.8182 108.5779 97.13353 208.8883
    673.69
    273.69

    Since NPV is positive project is viable & can be undertaken


    Addl working (Not asked in exams)
    Profitability Index or Benefit cost PV
    Ratio (BCR) =
    Inflow/Invt
    Net Benefit cost Ratio NBCR
    NBCR = BCR -1
    0.684

    1.684

    Here again we can say that project can be undertaken


    Guidelines wrt BCR & NBCR for acceptance/rejection of project
    BCR
    NBCR
    Decision
    >1
    Positive
    Accept
    =1
    0 Indifferent
    <1
    Negative Reject

    336.374
    ( Includes op flow + T benefits)

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