0 1 2 3 4 5

Cashflow -1900 300 500 600 800 500

Cumulative Cash flow -1900 -1600 -1100 -500 300 800

Years
before full
recovery
3 500 Uncovered cost at start of the year
800 Cashflow during the year

Payback 3.625
 Cost of captial 12%
Gas Powered Discounting Electric Powered Discounting
0 (17,500) (17,500) (22,000) (22,000)
1 5,000 4,464 6,290 5,616
2 5,000 3,986 6,290 5,014
3 5,000 3,559 6,290 4,477
4 5,000 3,178 6,290 3,997
5 5,000 2,837 6,290 3,569
6 5,000 2,533 6,290 3,187

NPV 3,057 3,861

IRR 18% 18%
 Discounted
Annual Cash Cash flow
flow @12% Cummulative
0 (52,125) (52,125) (52,125)
1 12000 10,714 (41,411)
2 12000 9,566 (31,844)
3 12000 8,541 (23,303)
4 12000 7,626 (15,677)
5 12000 6,809 (8,868)
6 12000 6,080 (2,788)
7 12000 5,428 2,640
8 12000 4,847 7,487

6.51 years
Year $ DF @ 15% PV at 15% DF @ 20% PV at 20%
0 (50,000) 1.000 (50,000) 1.000 (50,000)
1 18,000 0.870 15,652 0.833 15,000
2 25,000 0.756 18,904 0.694 17,361
3 20,000 0.658 13,150 0.579 11,574
4 10,000 0.572 5,718 0.482 4,823
3,424 (1,242)

3424 (1,242)
IRR 18.7%
IRR 18.6%
 Expected Net Cash Flows
Year Project-A Project-B Year
0 (300) (405) 0
1 (387) 134 1
2 (193) 134 2
3 (100) 134 3
4 600 134 4
5 600 134 5
6 850 134 6
7 (180) - 7
 Project-A Project-B
12% 18% Project-A PV @12% PV @18% Project-B PV @12% PV @18%
1.00 1.00 (300.00) (300.00) (300.00) (405.00) (405.00) (405.00)
0.89 0.85 (387.00) (345.54) (327.97) 134.00 119.64 113.56
0.80 0.72 (193.00) (153.86) (138.61) 134.00 106.82 96.24
0.71 0.61 (100.00) (71.18) (60.86) 134.00 95.38 81.56
0.64 0.52 600.00 381.31 309.47 134.00 85.16 69.12
0.57 0.44 600.00 340.46 262.27 134.00 76.04 58.57
0.51 0.37 850.00 430.64 314.87 134.00 67.89 49.64
0.45 0.31 (180.00) (81.42) (56.51) - - -
200.41 2.66 145.93 63.68

18.10% 23.97%