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Monday, May 3, 2010

Mgt201 FM Solution IDea

MGT201 Assignment#1 Idea solution.
Net increase in revenues in 1 year 510000
Less: Operating cost of branch (230000+20000) 250000
260000
Add: Depreciation 100000
Operating Earnings before Taxes: 360000
Operating earnings after taxes 360000
Net Cash Flow (NCF1) 360000
NPV= ΣCFt/ (1+i) t
NPV=360000/(1+0.09) 1
NPV=360000/(1.09) 1
NPV=360000/1.09
NPV=330275.2294

So on 10 years....

Net Present Value (NPV):
NPV= -IO+ΣCFt/ (1+i) t
1 year330275
2303005
3277986
4255033
5233975
6214656
7142229
8150560
9161150
10190085
total2258954

NPV= -IO+ΣCFt/ (1+i) t
=-1000000+2258954
=1258954

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