Assignment -Corporate Finance

Capital Budgeting Case Study

Project details
Year Project A Project B Rate of Return
0 -1000000 -900000 Payback period
1 40000 750000 Discounted payback period
2 200000 600000
3 500000 500000
4 1000000 400000
5 1300000 200000
Total Value earned in 05 years 3040000 2450000
$1,466,268.00 $1,604,295.27
Net present value $466,268.00 $704,295.27

Payback method
Project details
Year Project A Cummalative Project B
0 -1000000 0 -900000
1 40000 40000 750000
2 200000 240000 600000
3 500000 740000 500000
4 1000000 1740000 400000
5 1300000 3040000 200000
Total Value 5800000
0.26
Payback period 3.26

Discounted Payback method

Project details
Year Project A Cash flow Cummalative
0 -1000000 -
1 40000 33,333.33 33,333.33
2 200000 138,888.89 172,222.22
3 500000 289,351.85 461,574.07
4 1000000 482,253.09 943,827.16
5 1300000 522,440.84 1,466,268.00
3,077,224.79
0.11
Disc Payback period 4.11

MOST FEASABLE PROJECT TO INVEST BASED AS PER NPV , PAYBACK AND DISCOUNTED PAYBACK IS
PROJECT B
 MOST FEASABLE PROJECT TO INVEST BASED AS PER NPV , PAYBACK AND DISCOUNTED PAYBACK IS
PROJECT B

NAME : ANSHUM SETHI

REG NO : 1801016190145
 Date:05/04/19

Rate of Return 20%

Payback period 3.50%
Discounted payback period 4 years

Cummalative
0
750000
1350000
1850000
2250000
2450000
8650000
0.3
1.25

ethod

Project B Cash flow Cummalative

(900,000.00) 0
750,000.00 625,000.00 625,000.0
600,000.00 416,666.67 1,041,666.67
500,000.00 289,351.85 1,331,018.52
400,000.00 192,901.23 1,523,919.75
200,000.00 80,375.51 1,604,295.27
6125900.20576
0.66
1.66

BACK AND DISCOUNTED PAYBACK IS

BACK AND DISCOUNTED PAYBACK IS