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ACC501 Assignment No 01 Fall 2019 Solution & Discussion Due Date: 27-01-2020

ACC501 BUSINESS FINANCE Assignment 1 Solution & Discussion Fall 2019


BUSINESS FINANCE (ACC501)

ASSIGNMENT NO. 01

DUE DATE: JANUARY 27, 2020                    MARKS: 20

 

LEARNING OBJECTIVES:

After attempting this assignment, the students will be able to:

  • Evaluate any proposed project by using different capital budgeting
  • Understand the difference between NPV and
  • Derive inferences regarding the acceptance/rejections of the

 

ASSIGNMENT:

Alfa Corporation has identified the following two mutually exclusive projects. The CFO of the company wants to evaluate the identified projects. For this purpose he asked Mr. Naveed to evaluate those projects and establish their feasibility with the help of different capital budgeting techniques. Following are the details of the two mutually exclusive projects.

Period

Project A

(Rs.)

Project B

(Rs.)

0

-42,000

-42,000

1

25,000

15,000

2

21,000

17,000

3

15,000

23,000

4

11,000

27,000

As per the company policy, Mr. Naveed decided to evaluate both projects with the help of IRR and NPV techniques of capital budgeting.

 

Requirements: 

  1. What is the IRR for each of these projects? Which project company should accept according to IRR rule? (13 Marks)
  2. What is the NPV for each of these projects? If the required rate of return is 12 percent. Which project company should accept according to NPV rule? (5 Marks)
  3. If the decision on the basis of NPV is different than that of IRR, which particular criteria company should prefer and why? (2 Marks)

 

IMPORTANT INSTRUCTIONS:

  • Complete calculations are required for every part of the problem. Incomplete calculations will result in loss of
  • Discount factors and resulting figures should not be rounded up more than four decimal

 

IMPORTANT:

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Please Discuss here about this assignment.Thanks

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Tariq Sir,

This one is found on a different website but anyone should check if it is okay or not.

Attachments:

Question 1

I think 30% irr is better to calculate for project A

where NPV is not equal to zero but near 

to find out irr go to excel and =irr(array)  formula 

it will help u to find out the exect irr for any array

And 29% for project B

QUestion 2

chose the project with high NPV

Project B has higher NPV

Question 3

NPV is better capital budgeting technique then IRR.

Solution upload kr dyn kindly

ACC501 Solution Assignment No 01 Fall 2019

below link 

ACC501_Assignmnet_01_Solution_Fall_2019_vustudents.ning.com.pdf

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