Determine the npv of a company, Finance Basics

Example of NPV Value

A company is faced along with the following five (5) investment opportunities as:

 

Cost

NPV

P.I = Total P.v___             Initial capital

P.I Ranking

1.

2.

3.

4.

5.

500,000

100,000

400,000

200,000

160,000

150,000

  40,000

  40,000

100,000

  90,000

1.3

1.4

1.1

1.5

1.6

4

3

5

2

1

This company has 750,000/= available to investment projects, three and four are equally exclusive.  All of the projects are divisible. Such group should be selected in order to maximize the NPV.  Specify this NPV figure.

Solution

By using PI to rank the projects in order of preference 5, 4, 2, 1, 3.

In order to maximize NPV, the following projects combination must be chosen as:

                                                                                             Shs.

Funds available for investment                                                 750,000

Cost of project:        5             160,000

                              4              200,000

                              2              100,000

                              1              290,000                                     (750,000)

                                                                                                 NIL

NPV = 90,000 + 100,000 + 40,000 + (290,000/500,000) * 150,000   = 317,000

Posted Date: 1/31/2013 1:19:56 AM | Location : United States







Related Discussions:- Determine the npv of a company, Assignment Help, Ask Question on Determine the npv of a company, Get Answer, Expert's Help, Determine the npv of a company Discussions

Write discussion on Determine the npv of a company
Your posts are moderated
Related Questions
What is the need for documents in international business? Substantiate your answer with suitable examples.


After carefully reading all the available information, prepare a two page (double-spaced) essay and answer the following questions: Assume that we have the following data: C=100+0.

Financial Forecasting Financial forecasting refers to determination of the firm of financial requirements in advance. Financial forecasting is needs financial planning using b

if u were the professor wht your opinion about vincent mind stage

finance is divided into _____ and___________

according to given specialization take down an industry and investigate its managerial hierarchy to describe each of one of the managerial work level functioning


Debtors or Accounts Receiver Turnover Formula is as follow: Debtors/accounts receiver turnover  = Annual credit sales/Average debtor The ratio signify the number of ti

Following the Initial Public Offering (IPO), the shares of Rosetta Stone, the language instruction company, jumped almost 44 percent from an initial price of $18 to $25.55 in late-