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FINANCIAL MANEGEMENT ASSIGNMENT-
Question 1: What is the intrinsic value of a cochlear share if your required rate of return is 16% p.a?
Question 2: a) Estimate the cash flows for the project. Tabulate your answer.
Year
0
1
2
3
4
Prices
65,000
Increases Inventory
37,500
Increases in Sales
150,000
Cost of Sales
80,000
Final Sales
10,000
Net Cash Flow
Discount Factor
0.89286
1.69005
2.40183
3.03735
Present Value
(27,500)
205,357
388,711
552,420
728,964
b) Calculate the NPV for the project. Should the project be accepted?
Question 3: Option A
Initial Cost
Annual Cash Inflows
Annual Cash Outflows
Present Value Factors
(160,000)
75,000
35,000
40,000
0.90097
36,038.8
1.71279
68,511.6
2.44434
97,773.6
60,000
-20,000
3.10361
-62,072.2
5
3.69778
147,911.2
6
4.23333
169,333.2
7
4.71609
188,643.6
8
5.15128
206,051.2
Option B
(227,000)
30,000
50,000
45,048.5
85,639.5
122,217
155,180.5
184,889
211,666.5
235,804.5
257,564
Compute the following:
I. Net Present Value
II. Profitability Index
III. IRR for each option.
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