Finance Homework: NPV Calculation, Data Visualization, and Analysis

This finance homework assignment provides a detailed solution to various financial analysis problems. Section A focuses on Net Present Value (NPV) calculations, evaluating a project's financial viability through cash flow analysis and discounted cash flow techniques. The solution includes a table of cash inflows and outflows, NPV calculation, and a discussion on the project's financial implications, including the use of a default discounting rate and the consideration of the cost of capital. Section B delves into data analysis, presenting a frequency histogram and calculating key statistical measures such as mean, median, mode, and range. The assignment further explores the importance of measures of dispersion in describing data and contrasts data-driven decision-making (DDDM) with traditional methods, highlighting the role of data visualization in simplifying and speeding up verification. The assignment provides examples of data visualization using pie charts and bar charts to represent different data sets, such as passenger data, illustrating how graphical representations can be used to communicate information effectively. The solution is contributed by a student and published on Desklib, a platform for AI-based study tools.

ONLINE EXAM

Section A:
Question 1:
a)
Cash flows/Years 2020 2021 2022 2023 2024 2025 2026
Cash Inflows (£) -200,000 30,000 45,000 75,000 100,000 150,000 200,000
Cash outflows (£) 50,000 40,000 40,000 45,000 50,000 60,000
Net Profit -200,000 -20,000 5,000 35,000 55,000 100,000 140,000
Discounted@10
% 0.9090909 0.8264463 0.7513148 0.6830135 0.620921 0.5644739
Net Present
value -18,181.82 4,132.23 26,296.02 37,565.74 62,092.13 79,026.35
Cumulative Net
present value -200,000
-
218,181.82 -214,049.59 -187,753.57 -150,187.83 -88,095.70 -9,069.35
b)
The project has negative net present value; hence, it is not financially viable from company point
of view.
c)
For calculation of Net Present value a default discounting rate (10%) has been taken. The other
factors which could be taken into consideration is cost of capital which is 16% (exceeding 10%).
This shows it fails to cover even cost of capital of raising fund from market; therefore project
should be rejected.
Section B:
Question 3:
a)

5
15
25
35
45
55
65
75
85
More
0
2
4
6
Histogram
Frequency
Bin
Frequency
b)
i) Mean = 63.3
ii) Median = 62
iii) Mode = 62
iv) Range = 45
c)
The measures of central tendency are not adequate to describe data. Two data sets can have the
same mean but they can be entirely different. Thus to describe data, one needs to know the extent
of variability. This is given by the measures of dispersion. Range, interquartile range, and
standard deviation are the three commonly used measures of dispersion.
Question 4:
I)
Data driven decision making (DDDM) is a circle that involves gathering information that is
based on measurable goals or KPIs, breaking down examples and facts from experiences that and
use them to create techniques and exercises that will benefit the industry in different areas.
Presenting data in graphical form is the most widely used method. The input for such graphic
information can be a form of other information or some raw information. For example, a
reference diagram and a pie chart accept simple information as information. The simple
information in this case is that the prepared information itself, however, provides limited use.
Converting this or raw information into a simple graphical structure simplifies and speeds up
verification.

Another strategy is to incorporate information into a tabular structure. It is commonly used to
separate, sort and associate different data. It tends to be professional advice and basic
disadvantage or information by comparing the value, such as annual GDP, bank definition,
month-to-month usage, and so on. Quantitative information usually requires such a structure.
II)
a) Pie Chart
26%
20%
21%
16%
11%
6%
No. of passengers
Underground
Buses
Overground
DLR
Taxi
Ferry
b) Bar Chart
Underground
Buses
Overground
DLR
Taxi
Ferry
0
5000
10000
15000
20000
25000 22840
17650 18520
14370
9570
4920
No. of passengers
No. of passengers