1. Please find below the cash flow of the XYZ Project.

If the required rate of return of this project is 10%, please

find out the Net Present Value (NPV), Internal Rate of Return (IRR), Modified IRR (MIRR), Payback Period
(PBP), Discounted Payback Period, & Profitability Index (PI). Following each criteria, please state whether to
accept this project or not. (In exam you may be asked to find out IRR from a given NPV Profile, i.e., graphical
method.)

Yr CF (in million BDT) DCF (in million BDT)

0 -1000 -1000.0
1 300 272.7
2 400 330.6
3 500 375.7
4 600 409.8
5 700 434.6
2. Please find below the cash flow of the ABC Project. If the required rate of return of this project is 10%, please
find out the Net Present Value (NPV), Internal Rate of Return (IRR), Modified IRR (MIRR), Payback Period
(PBP), Discounted Payback Period, & Profitability Index (PI). Following each criteria, please state whether to
accept this project or not. (In exam you may be asked to find out IRR from a given NPV Profile, i.e., graphical
method.)

Yr CF (in million BDT) DCF (in million BDT)

0 -1200 -1200.0
1 700 636.4
2 600 495.9
3 500 375.7
4 400 273.2
5 300 186.3
3. Please refer to the two projects above -ABC & XYZ and decide which project/s to choose if –

a. The projects are mutually exclusive and total budget available is BDT3,000 million

b. The projects are mutually exclusive and total budget available is BDT2,000 million

c. The projects are mutually exclusive and total budget available is BDT1,000 million

d. The projects are NOT mutually exclusive and total budget available is BDT3,000 million

e. The projects are NOT mutually exclusive and total budget available is BDT2,000 million

f. The projects are NOT mutually exclusive and total budget available is BDT1,000 million

4. NPV Profile: Consider two mutually exclusive projects - P and Q. Which project is preferred and why? r=10%

End of Year Cash Flows

Year Project P Project Q
0 –100 –100
1 0 33
2 0 33
3 0 33
4 142 33
5. A project has an initial cost of $30,000, expected net cash inflows of $12,000 per year for 3 years, and a cost of
capital of 11%. Calculate the project’s Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal
Rate of Return (MIRR), Profitability Index (PI), payback period (PBP) and discounted payback period (DPBP)?
6. You are a financial analyst for the Hittle Company. The director of capital budgeting has asked you to analyze two
proposed capital investments, Projects X and Y. Each project has a cost of $10,000, and the cost of capital for
each is 12%. The projects’ expected net cash flows are as follows:

Expected Net Cash Flows

Year Project X Project Y

0 -$10,000 -$10,000

1 $6,500 $3,500

2 $3,000 $3,500

3 $3,000 $3,500

4 $1,000 $3,500
a. Calculate each project’s payback period, net present value (NPV), internal rate of return (IRR), modified
internal rate of return (MIRR), and profitability index (PI).

b. Which project or projects should be accepted if they are independent?

c. Which project should be accepted if they are mutually exclusive?