Financial Management Questions
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Added on 2019-10-30
Financial Management Questions
Added on 2019-10-30
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Running head: FINANCIAL MANAGEMENTFinancial ManagementName of the Student:Name of the University:Author’s Note:
1FINANCIAL MANAGEMENTTable of ContentsAnswer to Question 3.a:..................................................................................................................2Answer a.i:...................................................................................................................................2Answer a.ii:..................................................................................................................................2Answer a.iii:.................................................................................................................................3Answer a.iv:.................................................................................................................................3Answer a.v:..................................................................................................................................4Answer to a.vi:.............................................................................................................................5Answer to Question 3.b:..................................................................................................................5Answer b.i:...................................................................................................................................5Answer b.ii:..................................................................................................................................6Answer b.iii:................................................................................................................................6Reference & Bibliography:..............................................................................................................7
2FINANCIAL MANAGEMENTAnswer to Question 3.a:Answer a.i:Investment XInvestment YPeriodPeriodParticulars01230123t0t1t2t3t0t1t2t3Cash Flows-40000190001900019000-40000180001800018000C0C1C2C3C0C1C2C3Cumulative Cash Flow-40000-21000-200017000-40000-22000-400014000CC0CC1CC2CC3CC0CC1CC2CC3Payback Period (in years)2.112.22P=t2+(-CC2/C3)P=t2+(-CC2/C3)If both the projects would generate evenly cash flows in each year, then it is better toselect Investment X due to shorter payback period.Answer a.ii:Investment XInvestment YPeriodPeriodParticulars01230123t1t2t3t4t1t2t3t4Cash Flows-40000120001800027000-40000180001800018000C1C2C3C4C1C2C3C4Cumulative Cash Flow-40000-28000-1000017000-40000-22000-400014000CC1CC2CC3CC4CC1CC2CC3CC4Payback Period (in years)2.372.22P=t3+(-CC3/C4)P=t3+(-CC3/C4)As per the above table, Investment X would have longer payback period and therefore,Investment Y would be more profitable for investment purpose.
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