Determine the risk adjusted Net Present Value of the following Projects: - Particulars Project A Project B Project C Net Cash Outlays (Rs) 100,000.00 120,000.00 210,000.00 Project Life 5 Years 5 Years 5 Years Annual Cash Inflow (Rs) 30,000.00 42,000.00 70,000.00 Coefficient of Variation 0.40 0.80 1.2 The company selects the risk-adjusted rate of discount on the basis of the coefficient of variation. Coefficient of Variation Risk Adjusted Rate of Discount Present Value factor 1 to 5 years at risk adjusted rate of discount 0.0 10 % 3.791 0.4 12 % 3.605 0.8 14 % 3.433 1.2 16 % 3.274 1.6 18 % 3.127 2.0 22 % 2.864 More than 2.0 25 % 2.689
Determine the risk adjusted Net Present Value of the following Projects: - Particulars Project A Project B Project C Net Cash Outlays (Rs) 100,000.00 120,000.00 210,000.00 Project Life 5 Years 5 Years 5 Years Annual Cash Inflow (Rs) 30,000.00 42,000.00 70,000.00 Coefficient of Variation 0.40 0.80 1.2 The company selects the risk-adjusted rate of discount on the basis of the coefficient of variation. Coefficient of Variation Risk Adjusted Rate of Discount Present Value factor 1 to 5 years at risk adjusted rate of discount 0.0 10 % 3.791 0.4 12 % 3.605 0.8 14 % 3.433 1.2 16 % 3.274 1.6 18 % 3.127 2.0 22 % 2.864 More than 2.0 25 % 2.689
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Determine the risk adjusted
|
Particulars |
Project A |
Project B |
Project C |
|
Net Cash Outlays (Rs) |
100,000.00 |
120,000.00 |
210,000.00 |
|
Project Life |
5 Years |
5 Years |
5 Years |
|
Annual |
30,000.00 |
42,000.00 |
70,000.00 |
|
Coefficient of Variation |
0.40 |
0.80 |
1.2 |
The company selects the risk-adjusted rate of discount on the basis of the coefficient of variation.
|
Coefficient of Variation |
Risk Adjusted Rate of Discount |
Present Value factor 1 to 5 years at risk adjusted rate of discount |
|
0.0 |
10 % |
3.791 |
|
0.4 |
12 % |
3.605 |
|
0.8 |
14 % |
3.433 |
|
1.2 |
16 % |
3.274 |
|
1.6 |
18 % |
3.127 |
|
2.0 |
22 % |
2.864 |
|
More than 2.0 |
25 % |
2.689
|
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