Engineering Economics (I) Consider the cash flow below that is related to a capital investment made in year zero The net cash flows remained positive for the first two years but the third year saw a recession resulting in negative figures A positive cash flow was generated in the fourth and the final year of the project Remember, there is no concept of idle cash in the business world Any investment needed requires funds withdrawal from the investment pool and any positive cash flow generated by a project is deposited back into the investment pool Was it a worthwhile investment for a company whose minimum acceptable rate of return is 12 from such projects Prove your answer using investment pool concept you learned during the course Numbers in ( ) are negative or net cash outflow i e in year 0 and year 3 Period (n) Net Cash Flow (A n ) 0 $ (Your Roll Number) e g $ (170,545) 1 $ 100,000 2 $ 110,000 3 $ (Your Roll Number 100,000) e g $ (170545 100000) $ (70,545) 4 130,000 (ii) Assume the role of Manager Students Affairs of university You have very successfully secured a donation worth PKR 50,000,000 during an alumni dinner for offering Alumni Scholarship for outstanding students in the future The semester expenses equal PKR Your Roll Number (e g 17i 0545 Rs 170,545) per student The scholarship to be offered is to cover a two semester academic year You plan to offer scholarships to ten (10) students per year You and Manager Accounts are going to strike a deal with Faisal Bank manager The collected donation amount will be deposited in a long term account and the annual scholarships amount will be withdrawn from the account What annual rate of return will be sufficient to meet the requirement

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Engineering Economics (I) Consider the cash flow below that is related to a capital investment made in year zero. The net cash flows remained positive

Engineering Economics

(I)Consider the cash flow below that is related to a capital investment made in year zero. The net cash flows remained positive for the first two years but the third year saw a recession resulting in negative figures. A positive cash flow was generated in the fourth and the final year of the project.

Remember, there is no concept of idle cash in the business world. Any investment needed requires funds withdrawal from the investment pool and any positive cash flow generated by a project is deposited back into the investment pool.

Was it a worthwhile investment for a company whose minimum acceptable rate of return is 12% from such projects?Prove your answer using investment pool concept you learned during the course. Numbers in ( ) are negative or net cash outflow i.e. in year 0 and year 3.

Period (n)	Net Cash Flow (An)
0	$ (Your_Roll_Number) e.g. $ (170,545)
1	$ 100,000
2	$ 110,000
3	$ (Your_Roll_Number 100,000) e.g. $ (170545-100000) = $ (70,545)
4	130,000

(ii)Assume the role of Manager Students Affairs of university. You have very successfully secured a donation worth PKR 50,000,000 during an alumni dinner for offering Alumni Scholarship for outstanding students in the future. The semester expenses equal PKR Your_Roll_Number (e.g. 17i-0545 = Rs. 170,545) per student. The scholarship to be offered is to cover a two-semester academic year. You plan to offer scholarships to ten (10) students per year. You and Manager Accounts are going to strike a deal with Faisal Bank manager. The collected donation amount will be deposited in a long term account and the annual scholarships amount will be withdrawn from the account. What annual rate of return will be sufficient to meet the requirement?