Investment Decisions: Project Valuation and Cash Flow Analysis

This finance assignment focuses on project valuation and investment analysis, utilizing financial calculators and Excel for calculations. It addresses key concepts such as Net Present Value (NPV), Internal Rate of Return (IRR), and payback period. The assignment includes problems related to project value calculation, cash flow analysis, and investment decision-making. Specific questions involve determining the project value for a given year, calculating changes in wealth, and evaluating the uniformity of cash flows. The solutions provided demonstrate the application of financial formulas and tools to assess the profitability and feasibility of investment projects. This document is available on Desklib, a platform that provides students with access to solved assignments and past papers.

Running Head: MATH ASSIGNMENT
Math Assignment
Name of the Student:
Name of the University:

MATH ASSIGNMENT
Table of Contents
Question 1.............................................................................................................................................3
Question 2 & 3.......................................................................................................................................3
Question 4.............................................................................................................................................4
Question 5.............................................................................................................................................4
Question 6.............................................................................................................................................5

MATH ASSIGNMENT
Answers to the questions have been calculated using the Financial Calculator (Texas BA II Plus
Professional) and Excel as specified in the question. The steps for each one of them have been
mentioned herein:
Question 1
Calculation made in Excel :
6292 This is Project value for Year 3
Calculation made in BA II
Plus :
2nd CF Mode
1200 +- Enter
Press down arrow
2420 +- Enter
Press down arrow
Press down arrow again
0 Enter
Press down arrow twice
363+6292 =
Press Enter
Press NPV
10 Enter
Press CPT
Ans : 1600
Question 2 & 3
Q 2:
Kc -
10%
Initial Invt - $1000
IRR -
10%
Cash Flow in Year 1 = 1100
Q 3: Amounts are given in dollars

MATH ASSIGNMENT
Share holding % 0.05
NPV of the entire project 1200
Kc 0.08
CF1 -400
Cash Flow period 5 years
Change in wealth (Using
excel) 60
Question 4
Calculation of Identical Cash flows from Year 2- 5 (Formula) 512.05
77
1200 1200 (Discounted) Cumulative Inflow
(Check)
Yea
r 1
-400 -370.3703704 -
370.37
Yea
r 2
512.05768
44
439.006931 68.636
56
Yea
r 3
512.05768
44
406.4878991 475.12
45
Yea
r 4
512.05768
44
376.3776844 851.50
21
Yea
r 5
512.05768
44
348.4978559 1200
Change in
wealth
Ans : Option (e) - Uniformly between
Year 1-5
Reason: Year 0 or Year 0-5 cannot be the answer since Year 0 does not have any outflow and without
any outflow investment will not increase.
In, Year 1 if cash inflow is certain and there is a definite right to receive the inflows, then Year 1 as
investment leads to creation of rights to receive cash flows, hence uniformly between Year 1-5 makes
more sense since each year's cash flow will become certain by year end . Option uniformity is more
reasonable since risk/uncertainty is always present.
Question 5
Initial Investment - $1000
Cash flow from Year 1 to 5 -

MATH ASSIGNMENT
$400
Using BA II Plus Calculator
2nd CF
1000 +- Enter
Press Arrow down
400 Enter
Press Arrow down
5 Enter
Press IRR
Ans : 28.65 %
Question 6
All figures are in $ Cumulative Value
Year 0 -5000 1000
Year 1 1000 3000
Year 2 2000 7000
Year 3 4000
Year 4 1500
Payback Period calculation
Till Year 2 we have 3000 cash inflow.
In year 3 we have total 7000 inflow but we need 5000 only.
Ans as per Calculation in Excel : 2.5