Paper Topic:
Discounted Cash Flow Techniques
"Question 1 "Earnings before depreciation and taxes "100000 "Depreciation "50000 "Earnings before taxes "50000 "Taxes 30 "15000 "Earnings after taxes "35000 "Depreciation "50000 "Cash Flow "85000 "Question 2 "A "Earnings before depreciation and taxes "100000 "Depreciation "10000 "Earnings before taxes "90000 "Taxes 30 "27000 "Earnings after taxes "63000 "Depreciation "10000 "Cash Flow "73000 "B "Cash flow (problem 1 "85000 "Cash flow (problem 2a "73000 "Difference in cash flow "12000 "Question 3 "A . Payback "Project A "Project B "2 years "2 .25 year (2 years and 3 months "2 "2 .25 "In this case Project A should be choosen since it
has a shorter payback period compared to Project B "B . Net Present Value Method "Project A "Project B "Year "Cash Flow "PVIF 10 "Present Value "Year "Cash Flow "PVIF 10 "Present Value "1 "6000 "6000 (1 .1 "5454 .545 "1 "5000 "5000 (1 .1 "4545 .455 "2 "4000 "4000 (1 .1 1 .1 "3305 .694 "2 "3000 "3000 (1 .1 1 .1 "2479 .521 "3 "3000 "3000 (1 .1 1 .1 1 .1 "2253 .473 "3 "8000 "8000 (1 .1 1 .1 1 .1 "3756 .789 "NPV "1014 .713 "NPV "Present Value of Inflows "11014 .71 "Present Value of Inflows "10781 .76 "Present Value of Outflows "10000 "Present Value of Outflows "10000 "Net Present Value "1014 .713 "Net Present Value "781 .7638 "Since Project A had a higher NPV as compared to Project B , Project A should be choosen "C . The Firm should have more confidence in the Net Present...
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