ANSWERS TO PROBLEM QUESTIONS CHAPTER 7 (Book)
Question 1:
Payback Project A
Investment -15.300,00
CF1
8.700,00
-6.600,00
CF2
7.400,00
800,00
CF3
3.100,00
3.900,00
Payback A= 1 year and 11 months.
Payback Project B
Investment -10.700,00
CF1
5.300,00
-5.400,00
CF2
4.300,00
-1.100,00
CF3
4.800,00
3.700,00
Payback B= 2 years and 3 months.
NPV Project A (15%)
Investment
CF1
CF2
CF3
NPV=
-15.300,00
8.700,00
7.400,00
3.100,00
PV
-15.300,00
7.565,22
5.595,46
2.038,30
-101,02
NPV Project B (15%)
Investment
CF1
CF2
CF3
NPV=
-10.700,00
5.300,00
4.300,00
4.800,00
PV
-10.700,00
4.608,70
3.251,42
3.156,08
316,19
Question 2:
Investment
CF1
CF2
CF3
CF4
CF5
CF6
CF7
CF8
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
Project 1
Project 2
Project 3
-3.400,00
-4.800,00
-7.900,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
Investment
CF1
CF2
CF3
CF4
CF5
CF6
CF7
CF8
915,00
915,00
915,00
915,00
915,00
915,00
915,00
915,00
Payback 1
Payback 2
Payback 3
Project 1
Project 2
Project 3
-3.400,00
-4.800,00
-7.900,00
-2.485,00
-3.885,00
-6.985,00
-1.570,00
-2.970,00
-6.070,00
-655,00
-2.055,00
-5.155,00
260,00
-1.140,00
-4.240,00
1.175,00
-225,00
-3.325,00
2.090,00
690,00
-2.410,00
3.005,00
1.605,00
-1.495,00
3.920,00
2.520,00
-580,00
3 years and 8,6 months
5 years and 3 months
N/A
Question 3:
Discount rate
Investment
CF1
CF2
CF3
CF4
12%
Project 1
-6.000,00
4.300,00
4.900,00
5.400,00
5.600,00
Discount Payback:
Investment
CF1
CF2
CF3
CF4
Discount Payback:
PV
3.839,29
3.906,25
3.843,61
3.558,90
-2.160,71
1.745,54
5.589,15
9.148,05
1 year and 6,6 months
Project 2
-9.000,00 PV
4.300,00
4.900,00
5.400,00
5.600,00
3.839,29
3.906,25
3.843,61
3.558,90
-5.160,71
-1.254,46
2.589,15
6.148,05
2 years and 4 months
Project 3
-13.000,00 PV
4.300,00
4.900,00
5.400,00
5.600,00
Investment
CF1
CF2
CF3
CF4
Discount Payback:
3.839,29
3.906,25
3.843,61
3.558,90
-9.160,71
-5.254,46
-1.410,85
2.148,05
3 years and 4,7 months
Question 4:
Investment
CF1
CF2
CF3
CF4
CF5
CF6
-13.500,00
3.900,00
3.900,00
3.900,00
3.900,00
3.900,00
3.900,00
k
0%
PV
3.900,00
3.900,00
3.900,00
3.900,00
3.900,00
3.900,00
-9.600,00
-5.700,00
-1.800,00
2.100,00
6.000,00
9.900,00
Payback 0% 3 years and 5,5 months
Payback 7% 4 years and 1,3 months
Payback 21% N/A
Question 7:
YEAR
PROJECT A
0 -16.100,00
1
7.800,00
2
9.100,00
3
5.300,00
IRR
k=9%
19%
k
7%
PV
3.644,86
3.406,41
3.183,56
2.975,29
2.780,65
2.598,73
-9.855,14
-6.448,73
-3.265,17
-289,88
2.490,77
5.089,50
k
21%
PV
3.223,14
2.663,75
2.201,45
1.819,38
1.503,62
1.242,66
-10.276,86
-7.613,11
-5.411,66
-3.592,28
-2.088,66
-846,00
Question 8:
YEAR
IRR
PROJECT A
PROJECT B
0
-6.700,00
-4.600,00
1
2.100,00
1.800,00
2
3.900,00
2.300,00
3
2.700,00
1.900,00
14%
14%
Question 9:
Investment -207.000,00
1 CF1
64.000,00
2 CF2
64.000,00
3 CF3
64.000,00
4 CF4
64.000,00
5 CF5
64.000,00
6 CF6
64.000,00
7 CF7
64.000,00
PV CF
266.266,86 €
NPV
Profitability Index =PV CF/Investment
-207.000,00
55.652,17
48.393,19
42.081,04
36.592,21
31.819,31
27.668,97
24.059,97
59.266,86
1,29
Question 10:
YEAR
PROJECT ALPHA PROJECT BETA
0
-2.100,00
-3.400,00
1
900,00
1.700,00
2
1.200,00
2.900,00
3
1.100,00
1.400,00
PV CF
2.636,36 €
4.993,99 €
PROFITABILITY
INDEX
1,255
1,47
Question 12:
YEAR
PROJECT
0 14.700,00
1 -5.800,00
2 -5.300,00
3 -4.300,00
4 -3.700,00
IRR
12%
NPV
10%
-710,70
Question 13:
YEAR
DEEPWATER FISHING NEW SUBMARINE RIDE
0
-835.000,00
-1.650.000,00
1
450.000,00
1.050.000,00
2
410.000,00
675.000,00
3
335.000,00
520.000,00
IRR
21%
20%
NPV (15%)
86.591,19
115.348,89
YEAR
NSR-DWF
0 -815.000,00
1 600.000,00
2 265.000,00
3 185.000,00
incremental IRR
18%
20%
1.913,35
Question 16:
Board Game
Investment -345.000,00
CF1
265.000,00 -80.000,00
CF2
150.000,00
70.000,00
CF3
98.000,00 168.000,00
Payback:
1 year and 6,4 months
NPV (10%)
438.504,88
IRR
28%
DVD
Investment -570.000,00
CF1
360.000,00 -210.000,00
CF2
290.000,00
80.000,00
CF3
185.000,00 265.000,00
Payback
1 year and 8,6 months
NPV (10%)
705.935,39
IRR
25%
Board Game DVD
Difference
Investment -345.000,00 -570.000,00 -225.000,00
CF1
265.000,00 360.000,00
95.000,00
CF2
150.000,00 290.000,00 140.000,00
CF3
98.000,00 185.000,00
87.000,00
Incremental IRR
20%
Question 18:
AZF FULL-SUV
AZM MINI-SUV
Investment -650.000,00
CF1
370.000,00
-280.000,00
CF2
310.000,00
30.000,00
CF3
260.000,00
290.000,00
Payback:
1 year and 10,8 months
NPV (10%)
137.903,83
IRR
23%
Investment -975.000,00
CF1
490.000,00
-485.000,00
CF2
460.000,00
-25.000,00
CF3
410.000,00
385.000,00
Payback
2 years and almost a month
NPV
158.658,90
IRR
19%
AZM MINI-SUV AZF FULL-SUV
Difference (Full - mini)
Investment
-650.000,00
-975.000,00
-325.000,00
CF1
370.000,00
490.000,00
120.000,00
CF2
310.000,00
460.000,00
150.000,00
CF3
260.000,00
410.000,00
150.000,00
Incremental IRR
13%
Question 20:
DRY PREPERG
Investment -1.800.000,00
CF1
690.000,00
-1.110.000,00
CF2
430.000,00
-680.000,00
CF3
1.400.000,00
720.000,00
Payback:
2 years and 5'8 months
NPV (10%)
234.485,35
IRR
16%
SOLVENT PREPERG
Investment -925.000,00
-925.000,00
CF1
565.000,00
-360.000,00
CF2
410.000,00
50.000,00
CF3
340.000,00
390.000,00
Payback
1 year and 7,8 months
NPV
182.926,37
IRR
22%
DRY PREPERG
SOLVENT PREPERG Difference (dry - solvent)
Investment
-1.800.000,00
-925.000,00
-875.000,00
CF1
690.000,00
565.000,00
125.000,00
CF2
430.000,00
410.000,00
20.000,00
CF3
1.400.000,00
340.000,00
1.060.000,00
Incremental IRR
12%
Question 21:
NP-30
NX-20
Investment -940.000,00 -650.000,00
CF1
345.000,00
250.000,00
CF2
335.000,00
250.000,00
CF3
310.000,00
245.000,00
CF4
295.000,00
230.000,00
CF5
205.000,00
175.000,00
(NP-30) -(NX-20)
-290.000,00
95.000,00
85.000,00
65.000,00
65.000,00
30.000,00
NPV (12%) 159.547,88
192.367,77 Invest on NX-20
IRR
19,2%
24,0% Invest on NX-20
Incremental IRR
7% (not necessary in this case)
PI
1,2
1,3 Invest on NX-20