Mgt201 FM Solution IDea
Tuesday, May 04, 2010 Posted In FM , MGT Edit ThisMGT201 Assignment#1 Idea solution.
Net increase in revenues in 1 year 510000
Less: Operating cost of branch (230000+20000) 250000
260000
Add: Depreciation 100000
Operating Earnings before Taxes: 360000
Operating earnings after taxes 360000
Net Cash Flow (NCF1) 360000
NPV= ΣCFt/ (1+i) t
NPV=360000/(1+0.09) 1
NPV=360000/(1.09) 1
NPV=360000/1.09
NPV=330275.2294
So on 10 years....
Net Present Value (NPV):
NPV= -IO+ΣCFt/ (1+i) t
1 year330275
2303005
3277986
4255033
5233975
6214656
7142229
8150560
9161150
10190085
total2258954
Less: Operating cost of branch (230000+20000) 250000
260000
Add: Depreciation 100000
Operating Earnings before Taxes: 360000
Operating earnings after taxes 360000
Net Cash Flow (NCF1) 360000
NPV= ΣCFt/ (1+i) t
NPV=360000/(1+0.09) 1
NPV=360000/(1.09) 1
NPV=360000/1.09
NPV=330275.2294
So on 10 years....
Net Present Value (NPV):
NPV= -IO+ΣCFt/ (1+i) t
1 year330275
2303005
3277986
4255033
5233975
6214656
7142229
8150560
9161150
10190085
total2258954
NPV= -IO+ΣCFt/ (1+i) t
=-1000000+2258954
=1258954
