ACCCB Competency 1
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ACCCB/543 Competency 1 Assessment Course Title: Managerial Accounting and Legal Aspects of Business Competency Assessment Title: Net Present and Internal Rate of Return
The Net Present Value
The net present value of each project
NPV = [cash flow / (1+i) ^t] - initial investment
NPV. A= ($126,000/ (1+0.8) ^4)-$400,000 = $17,327.98
NPV. B = ($52,800/ (1+0.8) ^4)-$160,000
= $14,880.30
These two positive NPV implies that the Income generated by both investment exceeds the costs of the projects. Meaning that the projected earnings generated by both projects—
discounted for their present value—exceed the anticipated costs in today's dollars.
NPV For Project A
Project A
Initial Investment
-400000
Year 1
126000
$
$116,666.67
Year 2
126000
$108,024.69
Year 3
126000
$100,022.86
Year 4
126000
$92,613.76
Discount Rate
8%
NPV
$417,327.98
NPV For Project B
Project B
Initial Investment
-160000
year 1
52800
$48,888.89
year 2
52800
$45,267.49
year 3
52800
$41,914.34
year 4
52800
$38,809.58
Rate
8%
NPV
$174,880.30
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10
5
6 Variable Cells
18
19
20
21
22
23
24
25
26
27
28
29
30
31
7
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
8
9
10
11
2
11 13
12 14
12 Constraints
Name
Cell
$B$15 demand for A LHS
$B$16 total demand LHS
16 17 $B$17 procssing time LHS
Cell
$C$8 A
$D$8 B
15
16
Name
Final Reduced Objective Allowable Allowable
Value
Cost Coefficient Increase
Decrease
1E+30
250
100
Final
Value Price
250
350
600
0
0
Shadow Constraint
R.H. Side
0
4
-1
2
3
Q1 what is the range for objective coefficient of A and B?
125
350
600
1
1E+30
Allowable Allowable
Increase Decrease
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Q2 assume that the final value of B is 0 and the reduced cost of B is 1; explain the situation ?
Q5 If the objective coefficient of B goes up to 8 dollars what will happen?
Q6) if the obj coeff of A goes down to -5 dollars what does that mean?
125
125
100
1
Q3 if the objective coefficient of A goes down to 1 dollar and objective coefficient of B…
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is
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