investment

annual
t
i

-S/.1,000,000
S/.
150,000
5
10%
-S/.250,000.00 Reject
NPVsince the time value of money
S/.500,000
Accept
No,
renders
the present
value of cash flows in the far future virtually negligible.
S/.
100,000
S/.
102,137
S/.
95,000

Q1
Q2
Q3
Q4

Q5

Famous
0
1
2
3
4
5

Q6

150000

Less famous
S/.
4,000,000
S/.
3,000,000 S/.
2,000,000
S/.
3,000,000 S/.
2,000,000
S/.
3,000,000 S/.
2,000,000
S/.
3,000,000 S/.
2,000,000
S/.
3,000,000 S/.
2,000,000
10%
10%
S/.11,372,360.31 S/.11,581,573.54

Project A
-S/.
S/.
S/.

NPV

Project B
100 -S/.
200 S/.
150 S/.
Err:511

Incremental cash flows

90 -S/.
10
140 S/.
60
200 -S/.
50
Err:511

Q7

158%

146%

Q8

10499
-398.79
36

1.80%

Q9

S/.11,030.80

-S/.379.56

0
1
2

0%
-6750
4500
18000
S/.15,750.00

0%

Q10

NPV

50%
-6750
4500
18000
S/.4,250.00

Q11

IRR

Q12

Q14

Q15
Q16

100%
-100 IRR
200 NPV
-75

50%
S/.14.58

Loan
Pmt
n
r
Annuity factor

1000000
S/.142,456.39
8
3%
-S/.7.02

-S/.142,456.39

You dont amortize the loan

0
1
2
3
4
5
6
7
8

-1000000
S/.142,456.39
S/.142,456.39
S/.142,456.39
S/.142,456.39
S/.142,456.39
S/.142,456.39
S/.142,456.39
S/.142,456.39

-S/.616,761.61

150000

150000

150000

Having money earlier on woudl be better because of variations of discount rate

Incremental rate of return of incremental cash flows

100%
-6750
4500
18000
S/.0.00

-S/.652,408.55 S/.35,646.94