MD Fardeen Kibrie

ID : 21205058

FIN421 ,
Section o3

Assignment on Capital Budgeting

 a) Payback perish :

I
O 2 34 S

I
-

I I I &
72000
+ 27000
-

+ 27000 + 27000 + 27000

+ 27000
-
20000 -

15000

(7000) (12000)

= till
year s
-

so , 3) + 172000 -

12000
61000
S = 3 .
92
years
to recover back
the 72000

b) discounted payback period

+=
$603!.

↓
(200) = 16764 88 .

24 + /72000 -

60 314 ,
.
87) - = 4 697
years
.

16764 88 .

c) NOV

NPV
+70
:

=
5079 75 .

-
d)
~
MIRR

2
E &

z
·

routfit
$97271
2000 #
f p I .
5

#Vinblaw
j
= 27000 (1 .
1)" + 27000 (1 1)" + . 27000 (1 .

1)2 + 27000 (1 .

1) +

27000

=
$164837 .
7

So
,

MIRR
= 164837 7
1 0 118 100
-

-
= . x

97271 .
5

= 11 1 %
.

e) Under :

Payback period method , we decide to undertake the project

PBP is less than s at 3 92
as
years
.

·
Discounted payback period ,
we
reject the project as the PPBP is

than 4 at 4 697
more
years
.

years

calculations positive
· NPV ,
we
accept the
project as NPV is

at $5079 75 .

·
MIRR ,
we
accept this as MIRR is more than the required rate of
return at 11 .
1 %
f) NPV should be taken as the
primary derision
bot and this is

dusk of cask flow

because NPV accounts for time naue of money
, ,

provides indication for increase in value But the other methods

.

do not account for all these

.

9) IRR is not reliable for this project as the cash

flows are

non-commentional having
multiple changes in direction of east
flows .
This means ,
there will be multiple IRRs , making this

unreliable
.