Answer all questions Each question carries equal marks QUESTION 1 You have been asked by BCM Ltd to analyse two projects, A and B. Each project costs 10,000, and the company's cost of capital is 12 percent per annum. The expected net cash flows are as follows: Year Project A (E) Project B () 6,500 3,500 2 3,000 3,500 3 3,000 3,500 1.000 3.500 4 Required: a) Calculate the following for each project: i) Net present value ii) Modified internal rate of return iii) Discounted payback period (18 marks) b) Which project(s) should be accepted if they are independent? Explain why. (3 marks) Critically evaluate whether a change in the cost of capital might produce a conflict between the net present value and modified internal rate of return rankings of the two projects. (9 marks) c) Total: 30 marks (QUESTIONS CONTINUE ON NEXT PAGE) Page 2 of 8 SPE ME OS Future value interest factor of $1 per period at i% forn periods, FVIF. 8 1.060 000 1.00 1100 1190 1.121 5200 2 1.000 1.040 100 102 1.100 1.124166 1210 100 100 100 1135 1405 1 1 401 1012 1.125 1.120 1216 1212 1311 1412 151 1 2005 2014 1.130 1.1 135 1.419 150 17 2000 23 2.700 2.900 1072 1.148 1230 13% ST 19 303 083 112 11 TT 19 1851 103 2144 2.305 24 4300 1941.19 130 1423 160 1.22 25 5.160 1121114 29 1712192 24 2 52 5. 111 116 111 5710 EN 74 2012 2212 218 21 13 124 148 1886 2130 2.410 2720 1.006 4363 14 1310 1513 1722 30 S. 1561 11 558 1997 2011 23 24 11 13 1713 1605 1832 55111 13784 1.400 1653 18 2200 200 3.700 58672 10 1 1.43017122.000 2.40 2.14 3.380 3.00 55 ESHTE 2623 2014571734 20 23.00 381143185677253 88132056 31 29 22217841 2010 2008 3300 422256276.5483310598135170002123124123 301011 2439 3.34 3 5.783 78 100 11201 222 220 16 320 35 3.40 2.000 204 3.6 5518777 147 2045420100 15:00 12:00 130 40180 2200 322 480 700 10:30 1 21725140045250 50013:05 182.782 373 3750378 1.0508872 ME LP PS E Page 5 of 8 PO 6.703 Ots Present value interest factor of $1 per period at i% for n periods, PVIF.n). 91021123 0.990 0900 0.971 0.967 0.9520.93 0.935 0.976 0917 0.90909010193 OTT 0.37 0.02 0.556 0.17 0.540 0.833 20.980 0.901 0.43 0.925 0.90 0.90 0.873 0.857 0342 08280.812 0.79 0.783 0.709 0.750 0.743 0.731 0.7180.705 0894 092 0.915 0.3 0.2 0.40 0.86 0.71 0.772 0.750 0.731 0.792 Des 0.64 0.24 0.00 0.00 0.570 4 96 0.524 0.888 D855 0.823 0.792 0.63 0.735 0.708 0.6830.650 6636 0613 0.2 0.572 052 0534 0.516 0.400 0.482 DE81 650 0.6s AS Saarland 0.35 0.037 0.41 0.402 ca DE 0.790 0.746 0.630 056 05540535 557 439 456 042 04100390 0370 0352 0335 20.933 0.371 0.813 0.750 0.711 0.665 0.623 0.58 0.547 05130452 452 043 0450 0.37 0.354 0.333 0314 0.2% 0.279 0.923 0853 0.789 0731 0697 0927 0.540 0.00 0.4570.440494032 031 0327 0.30 0.285 0.266 0.349 0233 0.831 0.73 0.645 0.00 0.00 0.42403030303080242836203 0.22 0.20 0.19 DER 0463 067200000000101102 OSNS 0.429 0.388 03500317 0:287 0281 0237 0.250 195 0178 0162 0.143 9.135 1237 0780 0.025 0.55 0.497 0.444 0.37 0.356 0.30 026 025 0.23 0.20 0.17 0.16 0.152 0.17 0.12 0.113 10.879 0773 0.601 0.530 0.400 0.415 0.368 0.326 02000258 0229 0204 189 163 0145 0130 0 116 0.164 2093 5480 OS 0 577 50s 0.340 0.20 0.253 0232 0.20 160 430 125 0.11 0.099 GON 0078 0.73 SA 0542 D555 0315 0273 0230 0.20 0.00 0.00 105 0.005 0064 0.078.00 160.853 0728 0623 0534 0458 0394 0282 0252 021801880183 0701231070093 0.081 071 0.052 0054 17144 0714 605 OSE 0436 03 0.270 0231 1930 170 00 00 00 00 0.00 0.052 0045 36 000 OSAT 0.494 04160350 0.2 0.250 0212 0.100.153 150 0111 000 0.00 0.00 0.00 0.051 0.04 0038 1988 0.680 530 0415 0331 0.232 0.194.1680138 0916 0000 0000 000 000 0061 003 0037 0031 0673 0554 0454 0.312 0.215 0.178 0.14 0.1240106 00 00 00 00 003 0087 0025 25 0780 0610 0.375 0295 0.184 0.148 0.116 0.002 0.0740099 00470058 00300024 0.030 0018 0.013 0010 3742 0552 03080231 0.114 0.00 0.075 005 004 0033 000 000 00450012 000 000 000 0004 3.700 OS 0253 0.18 0.130 001 0.060 0.00 0.00 0.026 0.00 0.00 0.00 0.00 0.00 0.003 0.002 0.002 4672 0.455 0.30 0.208 0.142 0.097 0.06 0.046 0.032 0.022 0.01 0.01 0.000 0.00 0.00 0.00 0.002 0.001 0.001 0.001 500.00 02372 0.221 0.14 0.00 0.04 0.034 0.021 0.03 0.000 0.00 0.00 0.00 0.00 0 0000 0000 . 37 02 Future value interest factor of an ordinary annuity of $1 per period at i% for n periods, FVIFA.n). 14 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1000 1000 1000 1000 1000 1000 1000 22.010 2020 2090 2009 2010 2009 2.079 2080 2080 2100 2.10 2.20 2130 2100 2150 33.00 300 3091 3.22 3.153.1543.215 326 3278 3.310 33 324 3.40 30 3.63 30 3572 44.00 114 426 430 431 4.44 4.500 4.710 778430 SS 5215 6.450 7 9.200 T2 8923 9200 9.783 10.08 10.7 9.214 2150 3.897 10.200 90.637 11.20 11.436 11.60 12.00 1420 1430 9195 10.19910 11.491 11.978 12458 13.021 13.579 14.164 14.778 17519 15.2 10100520-98011414 12.00312520121113045441715.9934591715.722 17.54940 19 2 11 11.5 12 12.89 13.90 14207 14.972 15.78476545 17.500 18.53119.561 20.665 21814 23.045 244925739 27200 28.75 12 12.603 19.442 182 15.026 15917 16.870 170 18.577 20 21 2270 22133 25 660 27271 20.000 30.0 22.00 13 13.809 14.580 15.658 16.2 1713 18.682 2041 21495 22953 24522212 28.629 2285 22.00 14 14.547 159417006 11.292 10.500 21.045 22.560 24215 28.019 27.09530.0052393 2002 15 16.00757283 18.539 2.024 2157923276 23.29 27152231131772 1.405 3720 2041 B4 1W 181716020157 215238576 277 302 303 35900 36.672 550 20 10 11.430 2001221712 23.000 2500 20213 20140337503610545 44.501 53799 59.1986.0963 77 78 22 1019.615 21412 2344 25.645 28 1323000 33.000 745041301555000 55.750 61725 1730083406 1920011 221 5117 871 53978079 410 46.010 51150 58.00 63.00 10748.9.212 110.21236 28 283 200 36.459 41.4 372763209 73100 701 7114113033158018167 224821 45 47 55 56.566 49005468 04160090 60-412 73.52 0.12011143 112 11232 21571 2710034159 SRST UT 100 T 232 23 40 460 46275491 95.25 12015478 1064 2500 402558183770010120177120845412559 2.4.522 122 123 2002 20 40557372 BIS 2.402342343320271008 2009 Page 7 of 8 10 1190 8.00738 Present value interest factor of an ordinary) annuity of $1 per period at i% for n periods, PVIFA(1,n). Porod 1% 24 35 45 5 T 94 09 12 13 99000 0971 0962 0.952 03 093 0.925 0917 0.9090901 089 088 087 0.870 0.362 0.855 0347 0340 0233 1.970 1942 1913 1386 1.783 1.750 1.7301.713 1690 1668 1.647 1.620 OS 1SES 1566 15471528 2941 2854 2820 2775 2723 2673 2624 2577 2.531 2.487 2444 2.402 2361 222 223 224 2210 2.174 2140 2106 302 3803 3.71 3830 3.540 3.465 3.387 3.240 3.1703.102 3.037 2976 2.914 2.855 2.798 2.143 2.690 2.639 2.589 453 423294212 33 2.100 2.7915 3 60535173.633335232742.193.127 3053 2001 295 5417 50784917 4.623 4.480 4.356:231 4111 3.903.08 3.754 3.0 3.50 3.498 3410 3:32 BDO 5.70 5.52 5.30 5.200 5.033 4.860 4.712 4.564 4423 4253 4.1604.02 3.322 3812 3.705 3.605 652 7325 7020 8.463 6210 5971 5147 5.535 5335 5.148 4968 4.799 4.639 4.4874344 4 207 4098 3954 3.83 8.566 162 7780 7.10 6.802 6.515 6. 5.995 5.7595.537 5328 5.132 4.54 4.2 4.0 4.451 4.303 4.153 4031 9471 8111 727227360 70M GAI6.146.329 5.88 1.428 5.218. 010 423 4.850 4.40 4.183 9253 8.760 7.130 12 11.255 10.575 9385 8.863 8.384 6.805 640207 595 5687 5453 524 5022 4830 466 4.4.2 7.536 7.161 6.8148.492 8.194 5.918 5.660 5.421 5.187 4.968 4.793 461 4.43 13 12 134 11345 10 635 998 9.314 8853 8.35 7,804 7.487 7.103 6.750 6.424 6.122 5.842 5.583 5.342 5.118 4910 4715 4533 14 13.004 12.10 11.256 10.563 9.30 8.145 7.750 15 0512349 11938 11.113103109.7129.00 7.3676.962 8.6.28 6.302 6.002 5.724 5.468 5.229 5.000 4 502 4611 3550 16 14 18 13.578 12.561 11652 10838 10.105 9.47 OG 11 16.0126.165.75 5124 50924LES 8:3137245269746804 6.285.000 5405 S16247 12 15 562 14.292 13.166 12.106 1127410477 8.544 8.0227549 7.120 6.725 6.373 6.047 5.70 5.475 5222 4900 4775 18 16 398 14992 13.754 12650 1161010828 10.050 37 8.758 8.2017.702 7250 6.840 6.457 6.128 5.818 5.534 5273 5033 4812 1917.226 15.678 14 324 13.134 12.065 11.158 10.330 9.604 8.950 8.365.839 7300 6.938 6.550 6.190 S.BTT 5.584 5.316 50P 4343 20 1046 16.351 14 877 13.599 124521147010504 91208.5147 963 746070256 623 525 5920 5 528 5353 511 487 2522023 1952317413 15622 14.094 12783 11654 10.675 30 25.808 22 305 19.600 17292 15.372 13.765 12.400 11.258 10.274 9.4271.694 8.055 7.496 7.003 6.5666.177 5.829 5517 5.235 479 98239.07704727543 7330 6.73 6.464 0.097 76 5467 15656 35 29.409 24.909 21 487 18665 18.374 14.498 12948 11.655 10.567 95448.855 8.176 7586 7070 6.6176215 5.858 5539 5251 4999 40 32 635 27355 23.115 19.793 17.159 15.046 13.332 11.525 10.75 9.7798.951 8244 7634 7.105 8.542 6.233 5.11 5.548 5.258 49 5039106 31424 25 73021 482 1825615762 13801 12:33 10 962 99150042 836476757133 6.661 6245 5880 5554 5252 2900