Scribd
Upload
6 views

d10 v3.3

The document provides various financial calculations for projects, including NPV, BCR, IRR, and Payback periods for different cash flow scenarios. It also includes examples of calculating break-even points and sales volumes required for profit under different cost structures. Key results include an NPV of 19,320, a BCR of approximately 1.19, an IRR of 18.69%, and a discounted payback period of 3.38 years.

Uploaded by

supratikbanerjee2001
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
6 views

d10 v3.3

The document provides various financial calculations for projects, including NPV, BCR, IRR, and Payback periods for different cash flow scenarios. It also includes examples of calculating break-even points and sales volumes required for profit under different cost structures. Key results include an NPV of 19,320, a BCR of approximately 1.19, an IRR of 18.69%, and a discounted payback period of 3.38 years.

Uploaded by

supratikbanerjee2001
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 7

Illustration 1, NPV, BCR, IRR, Payback

The expected cash flows of a project are as follows (discount rate 12%):
 Year Cash flow
 0 –100,000
 1 20,000
 2 30,000
 3 40,000
 4 50,000
 5 30,000
Calculate: (a) NPV (b) BCR (c) IRR (d) Payback period.

1
Illustration 1, NPV, BCR, IRR, Payback
NPV=20000/1.12+30000/1.25+40000/1.4+50000/1.57+30000/1.76-100000
=17857+24000+28571+31847+17045-100000=19320

BCR=119320/100000=~1.19

IRR: Disc rate 18%: NPV=1743/-, for 19%: -767/-


IRR=18%+(1743/(1743+767))*1%=18.69%

Payback period: Slightly more than 3 years

2
Illustration, discounted payback
Consider purchase of a machine costing Rs. 500000, cash flow is as follows:
Year Expected cash inflow
1 200,000
2 250,000
3 150,000
4 100,000
5 75,000
Calculate the discounted payback period if the discount rate is 13 per cent

3
illustration
Year Cash flow Disc effect NPV Cumulative cash
0 -500000 1 -500000 -500000
1 200000 0.885 177000 -323000
2 250000 0.783 195750 -127250
3 150000 0.693 103950 -23300
4 100000 0.613 61300 38000
5 75000 0.542 40650

The discounted Payback period is:


3+23300/(23300+38000)=3.38 years
4
Illustration: CVP, BEP
For a company, Fixed cost Rs. 4000, Break-even sales Rs. 20,000,
Profit Rs. 1000, Selling price Rs. 20 per unit. Calculate: (a) Sales and
marginal cost of sales (b) New BEP when SP is reduced by 15%

BEP in sales=FC/PV Ratio, 20000=4000*20/(20-V), get V=16


FC+Profit=Q*(S-V), 4000+1000=(20-16)*Q, Q=1250,
Sales=1250*20=25000, Marginal cost =VC p u=16
New SP=20*0.85=17, New BEP Q’=FC/(S’-V)=4000, Sales for
Q’=4000*17=68000

5
Illustration: CVP, BEP
A company produces a single product and sells it at Rs. 10 per unit.
Variable cost is Rs. 6 per unit and fixed cost is Rs. 40,000 per annum.
Calculate (a) Break even point, (b) Sales volume required to earn a profit of
Rs. 60,000 per annum
For BEP: Q=FC/(S-V)=40000/(10-6)=10000

For Profit=Rs. 60000, Q = (FC+Profit)/(S-V)=(40000+60000)/(10-6)

6
Illustration: CVP, BEP
For a company, factory overhead=60000, sales overhead=12000, variable
cost pu=12, variable selling cost pu=3, sale price pu=24. Find BEP in units
and sale value. Also find no of units to sell for a profit of 90000

BEP: Q=FC/(S-V)=(60000+12000)/(24-12-3)=8000 units


BEP sale value=8000*24=192000

For profit of 90000, Q=(72000+90000)/(24-12-3)=18000 units

You might also like