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MGT201 Complete Solution Assignment#01 Spring 2013

Spring%202013_MGT201%20solution.docx


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                            *  MGT 201 1ST Assignment solution*

 

 

Presented by :

Payback period:

                 

      Years

    Cash flow

Cumulative cash           flow

            0

     (500,000)

   (500,000)

            1

     (800,000)

   (1300,000)

            2

      150,000

   (1150,000)

            3

      200,000

   (950,000)

            4

      250,000

    (700,000)

            5

      300,000

    (400,000)

            6

      300,000

    (100,000)

            7

      300,000

    200,000

            8

      300,000

     500,000

            9

      300,000

     800,000

           10

      300,000

     1100,000

 

Payback period:        =       6 + (100,000/300,000)

                                          =         6 +0.333

      Payback period   =         6.33 years

 

 

 

 

Net present value:

                                    

Year

Cash flow

Present value discount factor (14%)

Present value

             0

      (500,000)

          1.00

      ( 500,000)

             1

      (800,000)

          0.877

      (701600)

              2

       150,000

          0.769

         115,350

              3

       200,000

          0.675

        135,000

              4

       250,000

          0.592

        148,000

           5-10

       300,000

          2.304

        691,200

  Net present value

 

 

       (112,050)

 


                                               
Because the net present value is negative the project is unacceptable.

 

 

 

 

Year

Cash flow

Discount factor (12%)

Present value

Discount factor (11%)

Present value

         0

  (500,000)

     1.00

    (500,000)

       1.00

 (500,000)

         1

  (800,000)

     0.893

    (714,400)

      0.901

 ( 720,800)

         2

  150,000

     0.797

   119,550

      0.812

   121,800

         3

  200,000

     0.712

    142,400

      0.731

   146,200

         4

  250,000

     0.636

    159,000

      0.659

   164,750

       5-10

   300,000

     2.613

    783,900

      2.787

   836,100

 

 

 

    ( 9,550)

 

    48,050

 

                        

               =0.01  [   X [0.11           48050, IRR        O,   0.12        (9550)]48050]57600

                =       X/0.01=48050/57600

                X   =     (0.01)*(48050)/57600

                     =0.00834

        X   =   0.00834

             = X    + 0.11

              =O.OO834+0.11

      IRR        =0.11834     OR   11.834%

Because the internal rate of return is less than the required rate of return the project would not be acceptable.

 

 

 

 

m.com2013 gud keep it up 

But always try to upload in relevant subject group.

I have been added ur solution at this link 

http://vustudents.ning.com/forum/topics/1st-assignment-mgt-201-spri...

Once again thanks 

thanks alot  for appreciate

m.com2013 Welcome 

faizan is it right answer?

i was confused about it

 but its accurate bro

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