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Models of Cars Tested by XYZ

   

Added on  2020-05-04

29 Pages4396 Words459 Views
Finance
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Running head: INTRODUCTION TO FINANCIAL MANAGEMENTIntroduction to financial managementName of the universityName of the studentAuthors note
Models of Cars Tested by XYZ_1

1INTRODUCTION TO FINANCIAL MANAGEMENTTask:Introduction:The report is prepared to analyze the four models of cars that have been successfullytested by Research and development of XYZ. Evaluation of all the models are done using severaltechniques of capital budgeting such as average annual profits, payback period, return on capitalemployed and net present value. Financial performances of all the models are compared bycomputing internal rate of return. Profit on tax by XYZ is paid at an annual rate of 30%. Over thefive year of construction, organization claims capital allowances of purchase cost on straight linebasis. The nominal after tax cost of capital and real after tax cost of capital stood at 10% peryear.Analysis and evaluation of Model I:
Models of Cars Tested by XYZ_2

2INTRODUCTION TO FINANCIAL MANAGEMENTStatement showing calcuation For Model 1Amounts are in "000"Particulars012345TotalProfit before depreciation and Tax70654020-30Less:Depreciation2424242424Profit Before Tax464116-4-54Less:Tax @ 30%13.812.34.800Profit After Tax32.228.711.2-4-54A)Average Annual profit2.82B) Initial Investment120Return on capital Employed2%C)Profit After Tax32.228.711.2-4-54Add:Depreciation2424242424Less:Tax paid013.812.34.80Net Cash flow56.238.922.915.2-30
Models of Cars Tested by XYZ_3

3INTRODUCTION TO FINANCIAL MANAGEMENTInitial Investment-120Accumulated cash flow-63.8-24.9-213.2-16.8Pay back period non discounted (years)3.13Discounting factor @ 10%0.90909090.826450.751310.683010.620921Discounted cash flow51.0932.1517.2110.38-18.63Accumulated discounted cash flow-120-68.91-36.76-19.56-9.17-27.80Payback period discountedNilD)NPV calculation at different discounting rateDiscounting rate @0%11111Discounted cash flow56.238.922.915.2-30Total discounted cash inflow103.2Less:Initial Investment120Net Present value-16.8Discounting rate @2%0.98039220.961170.942320.923850.905731Discounted cash flow55.0937.321.514.0-
Models of Cars Tested by XYZ_4

4INTRODUCTION TO FINANCIAL MANAGEMENT803989579242527.1719
Models of Cars Tested by XYZ_5

5INTRODUCTION TO FINANCIAL MANAGEMENTTotal discounted cash inflow100.937Less:Initial Investment120Net Present value-19.063Dicounting rate @4%0.96153850.924560.8890.85480.821927Discounted cash flow54.03846235.965220.35812.993-24.6578Total discounted cash inflow98.6969Less:Initial Investment120Net Present value-21.303Discounting rate @6%0.94339620.890.839620.792090.747258Discounted cash flow53.01886834.620919.227312.0398-22.4177Total discounted cash inflow96.4891Less:Initial Investment120Net Present value-23.5
Models of Cars Tested by XYZ_6

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