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    Tutorial 4

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    Mohamed Zamri
    The document discusses capital budgeting techniques for evaluating two potential projects for Apex Ltd. and two machines for Olay Ltd. It provides the initial costs and cash flows for each and asks to calculate the payback period, net present value at given discount rates, and profitability index for each to determine which projects/machines should be accepted based on these metrics.

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    Download as PDF, TXT or read online from Scribd

    Tutorial 4

    Uploaded by

    Mohamed Zamri
    24 views2 pages
    The document discusses capital budgeting techniques for evaluating two potential projects for Apex Ltd. and two machines for Olay Ltd. It provides the initial costs and cash flows for each and asks to calculate the payback period, net present value at given discount rates, and profitability index for each to determine which projects/machines should be accepted based on these metrics.

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    it is good understand in geo

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    Tutorial 4 (1)

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    The document discusses capital budgeting techniques for evaluating two potential projects for Apex Ltd. and two machines for Olay Ltd. It provides the initial costs and cash flows for each and asks to calculate the payback period, net present value at given discount rates, and profitability index for each to determine which projects/machines should be accepted based on these metrics.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    24 views2 pages

    Tutorial 4

    Uploaded by

    Mohamed Zamri
    The document discusses capital budgeting techniques for evaluating two potential projects for Apex Ltd. and two machines for Olay Ltd. It provides the initial costs and cash flows for each and asks to calculate the payback period, net present value at given discount rates, and profitability index for each to determine which projects/machines should be accepted based on these metrics.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    FINANCIAL MANAGEMENT

    TUTORIAL 4
    CAPITAL BUDGETING
    1. Apex Ltd. is considering a project with following cash flows:

    Initial Cost Rs. 100,000


    Cash flow: Rs.
    Year 1 50,000
    Year 2 50,000
    Year 3 30,000
    Year 4 20,000
    Year 5 10,000

    a. Calculate the Payback Period for the project.


    b. Calculate the NPV of the project if the cost of capital is 10%
    c. Calculate the Profitability Index.

    2. Olay Ltd. is considering two new machines to be purchased with following cash flows:
    Machine 'X' Machine 'Y'
    Capital Cost Rs. 120,000 Rs. 200,000
    Cash flow: Rs. Rs.
    Year 1 50,000 50,000
    Year 2 50,000 50,000
    Year 3 30,000 60,000
    Year 4 20,000 60,000
    Year 5 10,000 -

    a. Calculate the NPV for each project if the cost of capital is 12%
    b. Calculate the Profitability Index for each project.
    c. Calculate the Payback Period for each machine.
    3.

    4.

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