- Compute the NPV and IRR for project whose initial cost is 30,000 and cash inflows are 14000, 8200, 12000, 15000, 22000. Discount Rate is 10%. Cost of Capital if borrowed is 15%. Show value of NPV at IRR as discount factor. Based on the above calculations, should the project be considered?
SOLUTION:
The calculations are done in excel where NPV is calculated using time value of money and IRR value is found which is closest to NPV =0
2. Calculate the Cash Cycle using the following information. (Assume 360 days in a year).
Opening Balances
Raw Material 4,00,000
WIP 80,000
Finished Goods 6,00,000
Debtors 2,50,000
Creditors 5,60,000
Closing Balances
Raw Material 5,00,000
WIP 70,000
Finished Goods 7,25,000
Debtors 3,15,000
Creditors 6,25,000
Costs Incurred during the year
Manufacturing Costs 10,45,000
Excise Duty 8,50,000
Selling and Distribution Expenses 4,20,000
Admin. Overheads 3,00,000
Total Sales 4,20,00,500
Total Purchases 3,23,00,000
30% of sales are on credit and 80% of purchases are on credit.
SOLUTION:
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