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  • Year 1/ (1+i) N OC For Land Cultivation OC For Rearing PV For OC Loan

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    Vivek Kankipati
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    Investment Cost Operating Cost Returns year for Building and Machinery for rearing and 3325 from second year onwards land ploughing every year. PV @40% NPV@40% B-C Ratio IRR Analysis: 1 Doing the project with two interest rates is not profitable because the incremental returns are year 10000 PV of Gross Returns@15% PV of Gross Returns@40% 2 The Returns from the project @15% is more compared to that of 40% hence selecting 15% 4 the cost to Benefit ratio

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    Roll.No-48

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    Investment Cost Operating Cost Returns year for Building and Machinery for rearing and 3325 from second year onwards land ploughing every year. PV @40% NPV@40% B-C Ratio IRR Analysis: 1 Doing the project with two interest rates is not profitable because the incremental returns are year 10000 PV of Gross Returns@15% PV of Gross Returns@40% 2 The Returns from the project @15% is more compared to that of 40% hence selecting 15% 4 the cost to Benefit ratio

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    9 views9 pages

    Year 1/ (1+i) N OC For Land Cultivation OC For Rearing PV For OC Loan

    Uploaded by

    Vivek Kankipati
    Investment Cost Operating Cost Returns year for Building and Machinery for rearing and 3325 from second year onwards land ploughing every year. PV @40% NPV@40% B-C Ratio IRR Analysis: 1 Doing the project with two interest rates is not profitable because the incremental returns are year 10000 PV of Gross Returns@15% PV of Gross Returns@40% 2 The Returns from the project @15% is more compared to that of 40% hence selecting 15% 4 the cost to Benefit ratio

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 9

    Investment Cost

    Operating Cost
    Returns

    Year

    1/(1+i)^n

    14000
    4000
    2000
    4000
    13500

    for Building and Machinery


    for Ploughing land
    1st year for rearing and 3325 from second year
    for land ploughing every year
    1st year
    22500

    OC for land
    cultivation

    OC for Rearing

    PV for OC

    Loan

    4000.00
    3478.26
    3024.57
    2630.06
    2287.01

    2000.00
    1739.13
    2514.18
    2186.24
    1901.08
    1653.11

    5739.13
    5992.44
    5210.82
    4531.14
    3940.13

    3478.26
    3024.57
    2630.06
    2287.01

    i=15%
    0.00
    1.00
    2.00
    3.00
    4.00
    5.00

    1.00
    0.87
    0.76
    0.66
    0.57
    0.50
    PV
    Initial
    Investmen
    t
    Gross Cost
    NPV @15%
    Total
    Gross
    Returns
    B-C Ratio
    IRR

    Year
    0.00
    1.00
    2.00
    3.00

    1/(1+i)^n
    1.00
    0.71
    0.51
    0.36

    25413.66 11419.91

    14000.00
    36833.57
    11413.66

    OC for land
    cultivation
    4000.00
    2857.14
    2040.82
    1457.73

    -36833.57

    13500.00 22500.00

    OC for Rearing
    1428.57
    1696.43
    1211.73
    865.52

    PV for
    Gross
    returns@
    40%
    PV for OC
    5428.57 9642.86
    4553.57 11479.59
    3252.55 8199.71
    2323.25 5856.93

    4.00
    5.00

    0.26
    0.19

    1041.23

    618.23

    11396.92

    5820.49
    24614.33

    Gross Cost
    Total Returns
    PV @40%
    NPV@40%
    B-C Ratio
    IRR

    1659.46

    -24614.00

    4183.52

    39362.62
    17217.41
    3217.41
    1.60
    13500.00 22500.00

    Analysis:
    1 Doing the project with two interest rates is not profitable because the incremental returns are

    PV of
    Gross
    Returns@
    15%
    11739
    17013
    14794
    12864
    11186

    Year
    1
    2
    3
    4
    5

    PV of
    Gross
    Returns
    @40%
    9642
    11479
    8199
    5856
    4183

    18000
    16000
    14000
    12000

    Year

    10000
    PV of Gross
    Returns@15%

    8000
    6000

    PV of Gross
    Returns @40%

    4000

    2000
    0
    1

    2 The Returns from the project @15% is more compared to that of 40% hence selecti
    3 The IRR for the 15% interest rate is less than 40% interest rate hence selecting 15%
    4 NPV value @15% interest rate is more than @40% interest rate hence going for 15%

    5 The cost to Benefit ratio @15% is more compared to that of @40%.

    Building and Machinery

    for rearing and 3325 from second year onwards


    land ploughing every year
    from second year onwards

    PV for Gross
    returns@15 Incremental FV for Land
    %
    Returns
    Cultivation

    11739.13
    17013.23
    14794.12
    12864.45
    11186.48

    FV for
    Rearing

    5274.10
    -2219.12
    -1929.67
    -1677.97

    2287.01
    2630.06
    3024.57
    3478.26
    4000.00

    3498.01
    5056.91
    4397.31
    3823.75
    3325.00

    67597.40
    1.84
    22500.00

    22500.00

    22500.00

    0.44

    Loan
    2857.14
    2040.82
    1457.73
    1041.23

    Incremental
    Returns
    1836.73
    -3279.88
    -2342.77
    -1673.41

    Loan

    6083.50
    5290.00
    4600.00
    4000.00

    FV for
    FV for
    Gross Increment
    Returns al Returs

    23611.58
    34219.69
    29756.25
    25875.00
    22500.00

    10608.10
    -4463.44
    -3881.25
    -3375.00

    7396.92

    22500.00

    22500.00

    22500.00

    0.70

    profitable because the incremental returns are negative i.e; there is not at all any true increment in the value of the money

    Year
    1
    2
    3
    4

    Incremental Increment
    Returns
    al Returns
    @15%
    @40%
    5274
    1836
    -2219
    -3279
    -1929
    -2342
    -1677
    -1673

    6000
    5000

    4000
    3000

    Year

    2000
    Returns@15%

    Incremental
    Returns @15%

    1000
    0

    Returns @40%

    -1000

    Incremental
    Returns @40%

    -2000

    -3000
    -4000

    % is more compared to that of 40% hence selecting 1st project is feasible


    ess than 40% interest rate hence selecting 15% interest rate is good.
    re than @40% interest rate hence going for 15% is good.

    ore compared to that of @40%.

    he value of the money

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