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MGT201 - Financial Management - Assignment No 1 Solution Due Date May 23,Spring Semester 2014

DUE DATE: 23RD MAY, 2014
Mr. Aslam is an army officer, who is going to be retired from the army in next few months. At his
retirement, he will receive Rs. 500,000 as gratuity. He has a plan to invest this money in any
business to earn some profit. For this purpose, he consults one of his friends for getting
suggestions and proposals regarding business plans with complete details. His friend, Mr. Asif
who is an expert in investment management, drafts for him two different business plans for the
period of next five years. Necessary information extracted from these drafts is given below:

Note: The required rate of return for plan-A is 12% and for plan-B is 15%.
a. Determine the time required by each project to recover its initial investment (3 marks).
b. Determine net present value for each plan (6 marks).
c. Analyze answers in (a) and (b) above and suggest a better plan for Mr. Aslam
(1 mark).
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Replies to This Discussion

hi any one can give idea plz

what kind of idea please?

In first question you are required to calculate the 'Pay Back Period' of each plan and in the 2nd NPV.

That's it

Payback period

Plan A: 2.47 years

Plan B: 3.01 Years

pay back period

plan A: 2.47 years NPV Rs 185474

plan B : 3.01 year NPV Rs 131279

Pay back period

Plan A 29 months and 20 days NPV 185468.5386

Plan B 36 months and 3.16 days NPV 131271.7019

ap nai pay back period kesai nikala hai kindly ap guide karsaktay hain? book mein is ka formula tou nahi hai i guess?

pay back ka formula konsa lagna h ?? 

payback period= inital investment / periodic cash flow .. yh wala ya koi or ??  much confusion mera to plan A ka NPV b kisi sy match ni ho rha 

plz guide 

ap ka 2.4 kesai aya hai mera tou 2.16 araha hai can you guide me plz

Or NPV kesai calculate ki hai wo bhi btadain mujhaysamjh nahi araha 

When cash inflows are uneven:

NPV = R1/ (1 + i)1+ R2/ (1 + i)2+ R3 /(1 + i)3 ... − Initial Investment

i is the target rate of return per period;
R1 is the net cash inflow during the first period;
R2 is the net cash inflow during the second period;
R3 is the net cash inflow during the third period, and so on ...

Decision Rule

Accept the project only if its NPV is positive or zero. Reject the project having negative NPV. While comparing two or more exclusive projects having positive NPVs, accept the one with highest NPV.

Paa faizan aqal mand kai liye ishara kafi hai

aur aap yeh kaam aqalmando kai liye kr diya hai

Jzak Allah

laikin mujh jeisay nikahto ko to pakki pakai kheer chaihiye

Bhai ap ka abhi clear ni hua ye sub?


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