1. (30% Marks) For Project B data given in table 12.2 determine the following values and compare them with Project A: a. Determine the Payback Period in years. b. Determine the Discounted Payback Period in years. c. Determine the Present Worth of the net profits. d. Determine the Future Worth of the net profits. e. Determine the Average Annual Worth of the net profits. f. Determine the Returns on Investment - ROI and ROI-D, and AW (ROI) CFAL = CFBT(t) + LCF(t) LCF = Loan In (+) or Loan Payment (-) CFBT =R-E LI= A PVP x (1+i) - TI = CFBT - LI - D || NP = TI x (1-TR) From Table 10.4 CFAT = CFAL - TP D = Investment x DR TP = TI X TR Cash T able Tove Taxes End Revenue Expanse Flow Flow Year Loan Cash Flow Cash Flow After Loan of Loan Interest Amount Cash 1 Net Profits Net Defits | B LCF) 1 0 Cash Flow Before Taxes CFBTY) -50,000 18.000 18.00 18.000 18.30 18.000 18.000 58.000 FD) 50.000 12.000 12.000 12.000 12.000 12.000 12.000 122,000 -7,7 -7.887 7,887 1 30,000 30,000 30,000 10,000 10.000 30,000 150,000 CFALO) -25.000 1 0,113 10,113 10,113 10,113 19.000 18.000 51,453 0 2,500 ,961 1,369 717 Depreciation Total Discounted Flow Income Paid After Net Cash Rate Amount Taxes Profits Flow DRO) D T I) TPO) CFAT) ECEATE) NIN) BOC) Profits Flows-AT 0 0 0 0 25.000 -25,000 0 0 0 1 25.000 2000 10,000 5,500 2.2007,913 17.0873,300 3.300 2.8706,881 32.00 16,000 39 15 10.0986,989 23 3323 187635 19.20 9.600 7,031 2.812 7,301 312 4,219 7.542 2,774 4,900 11.52 5.760 11,523 409 5,504 5.816 6,914 14.4563,953 3.147 11.52 5.760 12.240 4,896 13,104 150920 7 ,344 21,800 3,651) 6515 2.880 15.120 6,018 1 1.952 3072 9,072 30,872 3.92 5.167 100 50,000 51,451 2058130,872 0,872 171 9.146 Discounted NP(t) - NP(t)/ (1+ discount rate) Discounted CFAT() - CFAT(D) / (1+ discount rate) 576 0 6,547 Totale 6,547 Project B NP = TI X (1-TR) CFAL = CFBT(t) + LCF(t) LCF = Loan In (+) or Loan Payment (-) CFBT =R-E LI = A - PVPX (1+i) From Table 10.4/ TI = CFBT - LI-D CFAT = CFAL - TP / D- Investmept x DR__ TP = Tix TR Cash Flow Loan Discounted Revenue Expanse Flow Flow Total Cash Net Profits Net Profits Net Cash Flow ofits Flow (0) R 0 0 5 0,000 5 0,000 5 0,000 50,000 50,000 250.000 Cash Cash Loan Flow Flow Cash Before After Interest Taxes Loan Amount CFBTU) LCHO CFALO - 50.000 1000 10,000 0 20,000 ,042 11,958 2,000 20,000 -8.042 11.958 1,396 20,000 -8.04 11,958 731 20,000 20,000 0 20,000 0 20,000 50.00 4.127 45,873 4,127 E D 50,000 30,000 30,000 00 0.000 10,000 200.000 Depreciation Taxable come Rate Amount DRU) DXOTO) 0 0 0 31,31 16665 1,335 4.45 22.225 -3,621 14.81 7,405 11,864 7 .413,705 16,295 0, 00 0 20,000 100 50,000 45,873 1 2 3 Total Taxes Flow Paid Alter Flow Taxes TRO) CEATO CFATONPERO 0 30,000 -30,0000 0 534 11,424 -18,576 901 901 1,448 13,406 -5,170 2,172 -1,371 4,746 7.212 2,042 7,118 5,747 6,515 13,482 15.524 9,777 15,524 8,000 2,000 27,524 2,000 27.524 18,349 27,524 27524 Profits FlowAT 0 110,000 69719,934 1.643 10.137 4.650 4.742 5,590 7708 5.96 5,966 8,487 Totals Discounted NP(t) = NP(t) / (1+ discount rate) Discounted CFAT(t) = CFAT(t) / (1+ discount rate) Project A 1. (30% Marks) For Project B data given in table 12.2 determine the following values and compare them with Project A: a. Determine the Payback Period in years. b. Determine the Discounted Payback Period in years. c. Determine the Present Worth of the net profits. d. Determine the Future Worth of the net profits. e. Determine the Average Annual Worth of the net profits. f. Determine the Returns on Investment - ROI and ROI-D, and AW (ROI) CFAL = CFBT(t) + LCF(t) LCF = Loan In (+) or Loan Payment (-) CFBT =R-E LI= A PVP x (1+i) - TI = CFBT - LI - D || NP = TI x (1-TR) From Table 10.4 CFAT = CFAL - TP D = Investment x DR TP = TI X TR Cash T able Tove Taxes End Revenue Expanse Flow Flow Year Loan Cash Flow Cash Flow After Loan of Loan Interest Amount Cash 1 Net Profits Net Defits | B LCF) 1 0 Cash Flow Before Taxes CFBTY) -50,000 18.000 18.00 18.000 18.30 18.000 18.000 58.000 FD) 50.000 12.000 12.000 12.000 12.000 12.000 12.000 122,000 -7,7 -7.887 7,887 1 30,000 30,000 30,000 10,000 10.000 30,000 150,000 CFALO) -25.000 1 0,113 10,113 10,113 10,113 19.000 18.000 51,453 0 2,500 ,961 1,369 717 Depreciation Total Discounted Flow Income Paid After Net Cash Rate Amount Taxes Profits Flow DRO) D T I) TPO) CFAT) ECEATE) NIN) BOC) Profits Flows-AT 0 0 0 0 25.000 -25,000 0 0 0 1 25.000 2000 10,000 5,500 2.2007,913 17.0873,300 3.300 2.8706,881 32.00 16,000 39 15 10.0986,989 23 3323 187635 19.20 9.600 7,031 2.812 7,301 312 4,219 7.542 2,774 4,900 11.52 5.760 11,523 409 5,504 5.816 6,914 14.4563,953 3.147 11.52 5.760 12.240 4,896 13,104 150920 7 ,344 21,800 3,651) 6515 2.880 15.120 6,018 1 1.952 3072 9,072 30,872 3.92 5.167 100 50,000 51,451 2058130,872 0,872 171 9.146 Discounted NP(t) - NP(t)/ (1+ discount rate) Discounted CFAT() - CFAT(D) / (1+ discount rate) 576 0 6,547 Totale 6,547 Project B NP = TI X (1-TR) CFAL = CFBT(t) + LCF(t) LCF = Loan In (+) or Loan Payment (-) CFBT =R-E LI = A - PVPX (1+i) From Table 10.4/ TI = CFBT - LI-D CFAT = CFAL - TP / D- Investmept x DR__ TP = Tix TR Cash Flow Loan Discounted Revenue Expanse Flow Flow Total Cash Net Profits Net Profits Net Cash Flow ofits Flow (0) R 0 0 5 0,000 5 0,000 5 0,000 50,000 50,000 250.000 Cash Cash Loan Flow Flow Cash Before After Interest Taxes Loan Amount CFBTU) LCHO CFALO - 50.000 1000 10,000 0 20,000 ,042 11,958 2,000 20,000 -8.042 11.958 1,396 20,000 -8.04 11,958 731 20,000 20,000 0 20,000 0 20,000 50.00 4.127 45,873 4,127 E D 50,000 30,000 30,000 00 0.000 10,000 200.000 Depreciation Taxable come Rate Amount DRU) DXOTO) 0 0 0 31,31 16665 1,335 4.45 22.225 -3,621 14.81 7,405 11,864 7 .413,705 16,295 0, 00 0 20,000 100 50,000 45,873 1 2 3 Total Taxes Flow Paid Alter Flow Taxes TRO) CEATO CFATONPERO 0 30,000 -30,0000 0 534 11,424 -18,576 901 901 1,448 13,406 -5,170 2,172 -1,371 4,746 7.212 2,042 7,118 5,747 6,515 13,482 15.524 9,777 15,524 8,000 2,000 27,524 2,000 27.524 18,349 27,524 27524 Profits FlowAT 0 110,000 69719,934 1.643 10.137 4.650 4.742 5,590 7708 5.96 5,966 8,487 Totals Discounted NP(t) = NP(t) / (1+ discount rate) Discounted CFAT(t) = CFAT(t) / (1+ discount rate) Project A
