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FIN622 GDB No 01 Fall 2020 Solution / Discussion

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Fin 622 GDB solution|Fall 2020|Urdu|Hindi

FIN622 GDB 1 Solution:

Fin622 gdb 1 solution fall 2020
There are five capital budgeting techniques which we use to evaluate different projects:
1. Payback period
2. Return on investment (ROI)
3. Net Present Value(NPV)
4. Profitability index (PI)
5. International Rate of Return (IRR)
 
Solution:-
 
I have selected NPV to evaluate the above stated option A, B and C.
By Appling Formula: CS1/ (1+i) 1+ CF1/ (1+i) 1+……………. - Initial Investment
= 100,000 / (1.10)+ 100,000 / (1.10) +100,000 / (1.10) +100,000 / - 200,000
= 100,000 / 1.10+ 100,000 / 1.21 +100,000 / 1.33 +100,000 / 1.46 - 200,000
= 90,909 + 82,644+75,131+68,301-200,000
= 316,986
=116,986
NPV (Option A) = 116,986
NPV (Option B) =86,865
NPV (Option C) =118,420
Bases on the above Calculation YES income streams under each investment option really matter.

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