Slide 1

Make a choice between the below 2 situations:-

If interest is compounded annually at the rate of 5% per year, consider the following choices of payments made to you:-

Choice 1# Rs. 1500 now and Rs. 3000 one year from nowChoice 2# Rs.1900 now and Rs. 2500 one year from now

HomeworkFrom the following choices, which is your order of preference if you choose based on present value. Assume the discount factor at 12%

Does your decision change if the discount factor is 20% and if the discount factor is 5%

Cash Inflows in RsYearChoice 1Choice 2Choice 3Choice 4139000380004000033000211000100001500022000310000110001000013000410000130001000012000510000130001500010000620000150001000010000TOTAL1,00,0001,00,0001,00,0001,00,000ParticularsMachine ACost56125Annual Estimated Income after depreciation and tax:Year 13375Year 25375Year 37375Year 49375Year 51137536875Estimated life (Years)5Estimated salvage value3000Determine the ARR and payback period from the following data of Machine A

Homework