Shanto-Mariam University Of Creative
Technology
Module Name: Financial Management
Module Code: FIN 2303
Submitted To :
Mrs. Nasrin Jahan
Lecturer
Dept. of Business Administration(BBA)
SMUCT
Submitted By :
Md. Joynal Abedin
ID : 201407014
Batch : 48th
Semester : 7th
Department of BBA
Submission Date: 31.05.2020
Electric power truck
NPV at 12%
629000 629000 629000 629000 629000 629000
[ + + + +
(1+0.12) (1+0.12) (1+0.12) (1+0.12) (1+0.12) (1+0.12)6
1 2 3 4 5
+
] −22,00,000
= [ 561607.14+501434.94+ 447709.77+399740.87+356911.49 +318670.97 ] −2200000
= 2586075.18 - 2200000
= 386075.18
Gas power truck
NPV at 12%
500000 500000 500000 500000 500000 500000
[ + + + +
(1+0.12) (1+0.12) (1+0.12) (1+0.12) (1+0.12) (1+0.12)6
1 2 3 4 5
+
] −17,50,000
=[ 446428.57+398596.93+355890.12+317759.03+283713.42+253315.56 ]−17,50,000
= 1800703.63 – 1750000
= 50703.63
So we should select Electric power truck.
IRR for Electric power truck
NPV at 12%
629000 629000 629000 629000 629000 629000
[ + + + +
(1+0.12) (1+0.12) (1+0.12) (1+0.12) (1+0.12) (1+0.12)6
1 2 3 4 5
+
] −22,00,000
= [ 561607.14+501434.94+ 447709.77+399740.87+356911.49 +318670.97 ] −2200000
= 2586075.18 - 2200000
= 386075.18
NPV at 18%
629000 629000 629000 629000 629000 629000
[ + + + + +
(1+0.18) (1+0.18) (1+0.18) (1+0.18) (1+ 0.18) (1+0.18)6
1 2 3 4 5
] −22,00,000
= [ 533050.81+ 451738.00+382828.81+324431.20+274941.69+233001.43 ] −2200000
= 2158051.68 - 2200000
= 41948.32
NPV at LR
[
IRR= LR+ Difference between NPV at LR∧HR ( HR−LR) ]
386075.18
= 12%+ [ 386075.18−41948.32
(18−12) ]
= 18.73%
IRR for Gas power truck
NPV at 12%
500000 500000 500000 500000 500000 500000
[ + + + +
(1+0.12) (1+0.12) (1+0.12) (1+0.12) (1+0.12) (1+0.12)6
1 2 3 4 5
+
] −17,50,000
=[ 446428.57+398596.93+355890.12+317759.03+283713.42+253315.56 ]−17,50,000
= 1800703.63 – 1750000
= 50703.63
NPV at 18%
500000 500000 500000 500000 500000 500000
[ + + + + +
(1+0.18) (1+0.18) (1+0.18) (1+0.18) (1+ 0.18) (1+0.18)6
1 2 3 4 5
] −17,50,000
= [ 423728.81+359092.11+304315.41+257894.43+218554.60+185215.76 ]−17,50,000
= - 321198.76
NPV at LR
[
IRR= LR+ Difference between NPV at LR∧HR ( HR−LR) ]
50703.63
[
= 12%+ 50703.63+321198.76 (18−12) ]
= 12.81%
We should select Electric power truck.
Profitability Index (PI)
PV (CF )
PI = ICO
For Electric power truck
629000 629000 629000 629000 629000 629000
[ + + + +
(1+0.12) (1+0.12) (1+0.12) (1+0.12) (1+0.12) (1+0.12)6
1 2 3 4 5
+
]
¿ [ 561607.14+501434.94+ 447709.77+399740.87+356911.49+ 318670.97 ]
= 2586075.18
2586075.18
PI = 2200000
=1.17
For Gas power truck
500000 500000 500000 500000 500000 500000
[ + + + +
(1+0.12) (1+0.12) (1+0.12) (1+0.12) (1+0.12) (1+0.12)6
1 2 3 4 5
+
]
=[ 446428.57+398596.93+355890.12+317759.03+283713.42+253315.56 ]
= 1800703.63
1800703.63
PI = 1750000
=1.02
So we should select Electric power truck
ICO−C
Payback period (PBP) = A+
D
YEAR CF CCF
1 629000 629000
2 629000 1258000
For Electric
3 629000 1887000 power truck
4 629000 2516000
5 629000 3145000
6 629000 3774000
2200000−1887000
Payback period (PBP) = 3+ 629000
=3+0.49
=3.49
YEAR CF CCF For
Gas
1 500000 500000 power
2 500000 1000000 truck
3 500000 1500000
4 500000 2000000
5 500000 2500000
6 500000 3000000
1750000−1500000
Payback period (PBP) = 3+ 500000
=3+0.50
=3.50
So we should select Gas power truck.