Capital Budgeting Project 2022

Running head: CAPITAL BUDGETING
Capital Budgeting
Name of the Student:
Name of the University:
Author’s Note:

2Capital Budgeting
Table of Contents
Computation of Payback Period and NPV:................................................................................3
Project Appraisal:.......................................................................................................................3
Net Present Value (NPV):..........................................................................................................3
Payback period:..........................................................................................................................4
References and bibliography:.....................................................................................................6

3Capital Budgeting
Computation of Payback Period and NPV:
Project Appraisal:
From the above analysis, it can be observed that, the project is having a negative net
present value of $135,058 considering a discounting rate of 10%. Therefore, the project may
cause capital erosion rather than a capital accumulation. Therefore, it can be suggested not to
accept the proposed project. The project is having an internal rate of return of 3.56% where as
the cost of capital is 10%. Hence, from the view point of return also, the project should not be
accepted, as the internal return of the project is less than the cost of capital.
Net Present Value (NPV):
Net present value is the measure of profitability in terms of present value of future
expected revenues. Every project requires certain amount of investment initially. In