Mark Moskovics

Week 6
r 12%
10 1 0 1 2 3 4
$ (52,125.00) $ 12,000.00 $ 12,000.00 $ 12,000.00 $ 12,000.00

NPV $7,486.68

10 2 IRR 16.00%

10 3 FV $147,596.32
MIRR 13.89%

10 4 PV $59,611.68
PI 1.14

10 5 Payback 4.34375
4 years

10 6 0 1 2 3 4
$ (52,125.00) $ 12,000.00 $ 12,000.00 $ 12,000.00 $ 12,000.00
$ (52,125.00) $10,714.29 $9,566.33 $8,541.36 $7,626.22
$ (52,125.00) $ (41,410.71) $ (31,844.39) $ (23,303.02) $ (15,676.81)
Discounted
Payback 6.51363530016451

10 7 Year Project A Project B

0 $ (15,000,000.00) $ (15,000,000.00)
1 $ 5,000,000.00 $ 20,000,000.00
2 $ 10,000,000.00 $ 10,000,000.00
3 $ 20,000,000.00 $ 6,000,000.00

A NPV $12,836,213.37 $15,954,169.80

B IRR 43.968% 82.029%

10 10 Year Project S Project L R

0 $ (10,000.00) $ (25,000.00)
1 $ 3,000.00 $ 7,400.00
2 $ 3,000.00 $ 7,400.00
3 $ 3,000.00 $ 7,400.00
4 $ 3,000.00 $ 7,400.00
5 $ 3,000.00 $ 7,400.00
NPV $ 814.33 $ 1,675.34
IRR 15.238% 14.672%
 FV ($19,058.54) ($47,011.07)
MIRR 13.77% 13.46%
PI 1.0814328607035 1.06701375589412
Project S has higher IRR, MIRR, PI, but project L has a higher NPV so according to the book project L provides more

10 13 Year Project A Project B

0 -300 -405 IRR
1 -387 134
2 -193 134
3 -100 134
4 600 134
5 600 134
6 850 134
7 -180 0

Project A Project B
$1,000.00
$ - $0.00
0% $ 890.00 $399.00
2% $ 736.67 $345.59 $800.00
4% $ 601.57 $297.45
6% $ 482.29 $253.92
$600.00
8% $ 376.80 $214.47
10% $ 283.34 $178.60
12% $ 200.41 $145.93 $400.00
14% $ 126.71 $116.08
16% $ 61.11 $88.75
$200.00
18% $ 2.66 $63.68
20% $ (49.49) $40.62
22% $ (96.07) $19.37 $-
24% $ (137.73) ($0.26) 0% 5% 10% 15%
26% $ (175.00) ($18.41)
28% $ (208.39) ($35.24) $(200.00)
30% $ (238.32) ($50.87)
17% $ 31.05 $75.95 $(400.00)

At 10% Project A should be selected with the higher NPV

At 17% Project B should be selected with the higher NPV
 5 6 7 8
$ 12,000.00 $ 12,000.00 $ 12,000.00 $ 12,000.00

5 6 7 8
$ 12,000.00 $ 12,000.00 $ 12,000.00 $ 12,000.00
$6,809.12 $6,079.57 $5,428.19 $4,846.60
$ (8,867.69) $ (2,788.11) $ 2,640.08 $ 7,486.68

12%
to the book project L provides more value and should therefore be chosen.

Project A Project B
18.10% 24%

0
Column C
Column D
0

0% 5% 10% 15% 20% 25% 30% 35%