11-17-2004, 09:29 PM
Project 1
add depriciation amount to NP's
(200000-14000)/3=62000
Yr 1 NP=58000+62000=120000 Present Value=120000/1.1=109090.91
Yr 2 NP=-2000+62000=60000 Present Value=60000/1.1^2=49586.78
Yr 3 NP=4000+62000+14000=80000 PV=80000/1.1^3=60105.18
Total present value profit=(109090.91+49586.78+60105.18)=218782.87
Npv= 218782.87-200000= +18782.87
For IRR let cost of capital to be 25% then NPV=
120000/1.25 = 96000
60000/1.25^2= 38400
80000/1.25^3= 40960
Total= 175360
NPV=175360-200000= (24640)
IRR= 10+ (18782.87*(25-10))/(18782.87+24640)= 6.49%
add depriciation amount to NP's
(200000-14000)/3=62000
Yr 1 NP=58000+62000=120000 Present Value=120000/1.1=109090.91
Yr 2 NP=-2000+62000=60000 Present Value=60000/1.1^2=49586.78
Yr 3 NP=4000+62000+14000=80000 PV=80000/1.1^3=60105.18
Total present value profit=(109090.91+49586.78+60105.18)=218782.87
Npv= 218782.87-200000= +18782.87
For IRR let cost of capital to be 25% then NPV=
120000/1.25 = 96000
60000/1.25^2= 38400
80000/1.25^3= 40960
Total= 175360
NPV=175360-200000= (24640)
IRR= 10+ (18782.87*(25-10))/(18782.87+24640)= 6.49%
