NPV, Project Management

Assignment Help:


A brilliant UTM student at the end of his graduation is in presence of two opportunities and has to choose between them. One is a job offer with a salary of Rs15,000 per month (with no other benefits except for one month end of year bonus). It is expected that the monthly salary will increase on average by 10% every year for the first 5 years of his career. His personal costs amount to Rs5,000 per month and is expected to increase by 5% every year for the next 5 years. The next opportunity is the possibility of creating his own call centre which promises the following benefits: a steady revenue stream of Rs100,000 per month with an increase of 30% every year.

Operational costs for the call centre are about Rs65,000 per month and will increase by 10% each year for the first 5 years. It is assumed that an investment of Rs500,000 will be required in the second case which will be granted as an interest free loan by the Government with annual repayments of Rs100,000 over the next 5 years.

(a) Summarise the net cash flows for each opportunity for a period of 5 years. For simplification purposes, ignore the effect of taxes (both corporate and income tax).

(b) Calculate the Net Present Value for each opportunity. Use 10% as discount rate.

(c) Which opportunity is better from the financial point of view?

Related Discussions:- NPV

Identification of customers - implementing tqm techniques, Identification o...

Identification of Customers: Who are the external and internal customers? Can customers be segmented either on the basis of the service that they require, or their attitudes t

Explain the reasons for conflicts in project management, Question : Con...

Question : Conflict refers to any situation in which there are incompatible goals, thoughts or emotions within or between individuals or groups. For effective management of con

Assessing Infrastructure Project-Related Risks, The Three Gorges Dam is pot...

The Three Gorges Dam is potentially one of the largest, if not the largest infrastructure projects completed in the 21st century. Clearly, there were a number of key risks that the

Sequence activities and milestones , This assignment is designed to demonst...

This assignment is designed to demonstrate your understanding of project scheduling, time and cost estimation. Assignment: Update your group's WBS created in Assignment 1

Total quality management, TOTAL QUALITY MANAGEMENT: Decision making is...

TOTAL QUALITY MANAGEMENT: Decision making is an important management process in any organization. Without decision, nothing can be properly planned or accomplished. Decisions

Risk type, Risk type  To identify specific problems in your project, yo...

Risk type  To identify specific problems in your project, you first need to categorise the risks.  The project constraints are  well-organised in the PERIL database, which are

Cert IV homework, .due to time constraints and a huge inconvenience moving ...

.due to time constraints and a huge inconvenience moving house etc. although I have understood the whole course and handed in some homework already, would I be able to hand over al

Project management cycle, It is essential that you study the list below to ...

It is essential that you study the list below to ensure that you understand the terminology used in assignment and examination questions. The successful outcome of your assessment

Work breakdown structure, got a case study of IKEA..have to make ghantt cha...

got a case study of IKEA..have to make ghantt chart and work breakdown structure

Article delivery over network information system, Article Delivery Over Net...

Article Delivery Over Network Information System (ADONIS): ADONIS is a consortium of biomedical journal publishers that supplies full-text journals on CD-ROM for document deli

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd