SORU NO$.02$: $(50$ Puan$)$ Industrial Engineering Research Group at Yalova University

Technopark is developing an advertising campaign budget simulation project for a Yalova based

company. If successful, the projects will be implemented for a $4$ year $2022-2025$ period, and will

be financed by the Company's bank. Bank will provide loan upto an amount of NPV value, with

nominal annual rate of interest at cross$-$over point of the projects' NPV values $($k$\%$on X$-$Axis$).$ The

company will pay the loan back in $7$ years on a sinking fund basis, repayments will begin at the

beginning of $4^{th}$ year. All re$-$payments to the bank will be made at the "beginning" of each year.

Since the economic conditions are very volatile, the bank wants the research group to make NPV

simulations for cost of capital $(k\%$ of $0\%,5\%,10\%,15\%,20\%,25\%$ Cash flows for projects A &

$B$ over $5$ years from years $0$ to $5$ is given below $($Numbers being million TL$)$:

Part $($a$)20$ Points. The present cost of capital$/$opportunity cost $(k\%)$ in the financial markets is

$10\%.$ Evaluate A and B on the basis of NPV$.$ Interpret your results. Under the assumptions of

enormous volatility in the Turkish economy; research group at Y$..$Teknopark should submit a

feasibility study report for $0\%,5\%,10\%,15\%,20\%,25\%k(\%)$ values, using NPV ; IRR;

Discounted Payback Methods. Interpret the results which you have found. Shortly describe your

proposals to the Bank, and the company's management.

Part $($b$)20$ Points: In the final part of your report to the bank, develop a Sinking Fund flow for

the alternative repayment of the loan received from the bank, according to the instructions given

at the beginning of the problem above. $...$ Good Luck: