Project Evaluation Techniques

Non-discounted cash flow Approach

11. 16,000/(4,400+1,600) =P30,000

=2.666 years
24. [800,000-(4,000,000/10)]/4,000,000
12. 4,400/16,000 =10%
=27.5%
25.
13. 250,000/[80,000-(30,000*40%)]
250,000/68,000 26.
=3.67647 years Year Net cash Cost of PBP
inflow project
14. 50,000/15,000 0 45,000
=3.333 years 1 9,000 36,000 1
2 12,000 24,000 1
3 15,000 9,000 1
15. {15,000-[(50,000-5000)/8]}/50,000
4 9,000 0 1
9,375/50,000 4 years
=18.75%
27. [65,000-(200,000/5)]/200,000
16. 150,000/40,000 =12.5%
=3.75 years
28.
17. [40,000-(150,000/10)]/150,000 Year Net Cost of project PBP
=16.666% cash
18. inflow
Year Net cash Cost of project PBP 0 420,000
inflow 1 145,000 275,000 1
0 105,000 2 151,000 124,000 1
1 50,000 55,000 1 3 162,000 (124,000/162,000) .76543
2 45,000 10,000 1 2.76543
3 40,000 (10,000/40,000) .25 years
2.25
years 29. (55,000-12,000)/(250,000-10,000)
=17.91666%
19. (50,000+45,000+10,000)/2.25
=P46,666.666 30. 2,000*13.181
=P26,362
20. (15,000+17,000+19,000+21,000+23,000)/5yrs.
105,000
=18.09523%

21. (70,000+78,000+86,000+94,000+102,000)/5yrs.
(500,000/2)
=34.4%

22.
Net Cost of project PBP
Year cash
inflow
0 500,000
1 240,000 260,000 1
2 216,000 44,000 1
3 192,000 (44,000/192,000) .22916
2.22916
years
23. 3,000/10%
1. Year 3 [85,000-(160,000*30%)]*.40= 14,800
2. 8.
50,000 .81 40,500 Year Net cash Cost PBP
45,000 .65 29,250 flow
40,000 .52 20,800 0 160,000
35,000 .42 14,700 1 70,200 89,800 1
30,000 .34 10,200 2 76,600 13,200 1
Cash Flows 115,450 3 76,200 (13,200/76,200) .17232
Cost (105,000) 2.17232
NPV P10,450
9. Net Cash Flow(70000-20000) 50,000
3. Tax Shield(50000-(100/5))*.4 (12,000)
Rate PVF Difference Total After-tax Cash flow 38,000
16% 4.0386 Multiply by: PV of OA 3.6047
}.0386 Present Value 136,981.49
IRR 4.00 }.1162
Cost (100,000.00)
}.0776
Net Present Value P36,981.49
17% 3.9224
Lower Limit (IRR) = 16% + 1%(.0386/.1162)
= 16.33% 10.
240,000 .89 213,600
216,000 .80 172,800
4.
192,000 .71 136,320
P Q R S
168,000 .64 107,520
NPV 23,370 29,827 27,333 (7,854)
144,000 .57 82,800
P.I. 1.12 1.13 1.14 .96
Cash Flows 712,320
Cost 200,00 235,000 190,000 210,000
Cost (500,000)
0
NPV P212,320
Capital Budget 400,000 > 235,000+190,000
11. 712,320/500,000
5. =1.42464
P Q
NPV 23,370 29,827
12. Cash inflow 800,000
IRR 18.07% 17.6%
Multiply by: PV of OA @14% 5.21611
Life of Project 3 5
Despite P’s IRR > Q’s, life of project is only 3 yrs. Present Value 4,172,892.51
Cost 4,000,000
6. Net Present Value 172,892.51
PV of 1
@14%* .26974 20,000 5,394.8 13.
PV of OA
@14% 5.21611 12,000 62,593.38
Cash flow 67,988.18 14.
Cost (100,000)_ A B
NPV -32,011.82 Cash Inflow 60,000 13,000
PVF .73502 3.31212
*Discount rate= 5% + (10%-5%)1.8 Present Value 44,101.79 43,057.64
= 14% Cost (30,000) (30,000)
NPV 14,101.79 13,057.64
7.
85,000- 14,800 .862 60,512.4 15. PVF of OA @10% for 3 yrs. 2.48685
85,000- 8,400 .743 56,913.8 20,000*2.48685
85,000+6,000-14,800 .641 _48,844.2 45,000
Net Cash flow 166,270.4 =1.10526
Cost (160,000)
NPV P6,270.4
16. 1,500,000/400,000
=3.75 years
After-tax cash flows:
Year 1 [85,000-(160,000*30%)]*.40= 14,800
Year 2 [85,000-(160,000*40%)]*.40= 8,400
17. 21.
Rate PVF Difference Total Cash flow (400000-104800) 295,200
10% 3.7908 Tax Shield (295,200-(1000/5))*.40 38,080
}.0408 After-tax cash inflow 257,120
IRR 3.75 }.0949 PVF of OA 3.7908
}.0541 Present Value 974,690.49
11% 3.6959 Cost (1,000,000)
Lower Limit (IRR) = 10% + 1%(.0408/.0949) Net Present Value -25,309.50
= 10.4299%
22. 371,120/4.639
18. = 80,000
Sales(12,000*12,000u) 144,000,000
Variable (7,000*12,000u) (84,000,000) 23.
Fixed (25,000,000) Rate PVF Difference Total
Cash Inflow 35,000,000 14% 3.433
Tax Shield: (35M-(80/5))*.30 (5,700,000) }.0152
After-tax Cash flow 29,300,000 IRR 3.4482 }.1113
Multiply by: PVF of OA @12% 3.60477 }.0961
Present Value 105,619,942.726 15% 3.3521
Cost (80,000,000.00) Lower Limit (IRR) = 14% + 1%(.0152/.1113)
NPV 25,619,942.726 = 14.1365%

19. 24. 2,000*4.355

Before-tax cash inflow 17,861.60 = P8,710
Tax Shield (17,860-(42,825/4))*40% 2,861.50
After-tax cash flow (42,825/2.85498) 15,000.10
25.
Cost savings(10000*3)*2 60,000
20. 16,000*12%
Tax Shield(60,000-(150/5))*25% (7,500)
=P1,920
After-tax cash flow 52,500

PV of after-tax(52,500*3.60478) 189,250
PV of Salvage value(25,000*.56743) 14,186
Cost (175,000)
Net Present Value 28,436