0 1 2 3 4 5

Project A CF (42,000) 14,000 14,000 14,000 14,000 14,000

Project B CF (45,000) 28,000 12,000 10,000 10,000 10,000
PV Factor at 10% 1.0000 0.9091 0.8264 0.7513 0.6830 0.6209

Project A DCF (42,000) 12,727 11,570 10,518 9,562 8,693

Project B DCF (45,000) 25,455 9,917 7,513 6,830 6,209

Payback Period
Project A Cum CF (42,000) (28,000) (14,000) - 14,000 28,000
Project A PBP 3.00
Project A Cum DCF (42,000) (29,273) (17,702) (7,184) 2,378 11,071
Project A DPBP 3.75

Project B Cum CF (45,000) (17,000) (5,000) 5,000 15,000 25,000

Project B PBP 2.50
Project B Cum DCF (45,000) (19,545) (9,628) (2,115) 4,715 10,924
Project B DPBP 3.31

Net Present Value 10.00% WACC

0 1 2 3 4 5
Project A (42,000) 14,000 14,000 14,000 14,000 14,000
PV factor 1.0000 0.9091 0.8264 0.7513 0.6830 0.6209
NPV 11,071.01
NPV (fx) 11,071.01

Project B (45,000) 28,000 12,000 10,000 10,000 10,000

PV factor 1.0000 0.9091 0.8264 0.7513 0.6830 0.6209
NPV 10,924.40
NPV (fx) 10,924.40 146.62

NPV Profiles
Project A Project B
11,071 10,924
0% 0%
2% 2%
4% 4%
6% 6%
8% 8%
10% 10%
12% 12%
14% 14%
16% 16%
18% 18%
20% 20%
 22% 22%
24% 24%
26% 26%

Profitability Index 10% WACC

Project A
PV of inflows 53,071
Initial investment 42,000
PI (Proj A) 1.26 11,071

Project B
PV of inflows 55,924
Initial investment 45,000 10,924
PI (Proj B) 1.24

Weighted Ave. PI Init. Inv. PV of inf. PI WAPI

Project A 500,000 937,710 1.88 1.04 Project A 1
Project B 400,000 460,000 1.15 0.51 Project B 1
Project C 250,000 282,500 1.13 0.31 Project C 0
Project D 350,000 388,500 1.11 0.43 Project D 0
Project E 300,000 324,000 1.08 0.36 Project E 0
Capital Budget 900,000

Combinations:
A+B 1.55
C+D+E 1.11

Internal Rate of Return

0 1 2 3 4 5
Project A (42,000) 14,000 14,000 14,000 14,000 14,000
PV factor 1.0000 0.8343 0.6961 0.5808 0.4845 0.4043
IRR 19.86% 0.00
IRR (fx) 19.86%

Project B (45,000) 28,000 12,000 10,000 10,000 10,000

PV factor 1.0000 0.8220 0.6757 0.5555 0.4566 0.3754
IRR 21.65%
IRR (fx) 21.65%

Modified IRR 10.00% Reinvest Rate

 0 1 2 3 4 5
Project A (42,000) 14,000 14,000 14,000 14,000 14,000
FV factor 1.4641 1.3310 1.2100 1.1000 1.0000
Project A final year val (42,000) 0 0 0 0 85,471
PV factor 1.0000 0.8675 0.7526 0.6529 0.5664 0.4914
MIRR 15.27% 15.27%

0 1 2 3 4 5
Project B (45,000) 28,000 12,000 10,000 10,000 10,000
FV factor 1.4641 1.3310 1.2100 1.1000 1.0000
Project A final year val (45,000) 0 0 0 0 90,067
PV factor 1.0000 0.8704 0.7576 0.6595 0.5740 0.4996
MIRR 14.89% 14.89%

NPV vs IRR: timing 10% WACC

0 1 2 3 4 5
Project A (42,000) 14,000 14,000 14,000 14,000 14,000
Project B (45,000) 28,000 12,000 10,000 10,000 10,000

Project A NPV 11,071

Project B NPV 10,924

Project A IRR 19.86%

Project B IRR 21.65%

NPV vs IRR: scale 10% WACC

0 1 2 3 4 5
Project A (42,000) 14,000 14,000 14,000 14,000 14,000
Project C (21,000) 8,000 8,000 8,000 8,000 8,000

Project A NPV 11,071

Project C NPV 9,326

Project A IRR 19.86%

Project B IRR 26.19%

Project A Project C
 11,071 9,326
0% 0%
2% 2%
4% 4%
6% 6%
8% 8%
10% 10%
12% 12%
14% 14%
16% 16%
18% 18%
20% 20%
22% 22%
24% 24%
26% 26%
 0 1 2 3 4 5
3,000 (14,000) 2,000 4,000 4,000 4,000
10.72%

Chart Title

5% 10% 15% 20% 25% 30%

5% 10% 15% 20% 25% 30%

500,000 1.04
400,000 0.51
- -
- -
- -
900,000 1.55
12

10

6 Project A
Project B
4

-
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26%

12

10

6 Project A
Project C

2
 Project A
Project B

Project A
Project C
Project Zinser 351
units amount
Equipment data
Purchase cost of equipment Php 8,050,000
Installation cost Php 200,000
Initial working capital investment Php -
Equipment useful life years 10
Salvage value % of CC 0.0%
Depreciation method type SL
Training costs Php 50000
Salvage value of old equipment Php 500000
Revenue data
Sales quantity pcs/yr 10,000
Sales quantity annual escalation % p.a. 10.0%
Selling price Php/lb 1.126
Selling price annual escalation % p.a. 5.0%

Expense data
Raw Materials Costs cost/lb ??
Conversion Costs cost/lb 0.43
SG&A Expenses % of sales 7.0%
Cost of Customer Returns cost/lb 0.084
Tax rate % 36.0%

Terminal year data

Equipment selling price Php 100,000
Return of working capital investment % 100.0%

Capital budgeting cash flow schedule

Initial investment Php
Purchase cost of equipment
Freight-in
Insurance during transport
Installation cost
Working capital investment
Annual operating cash flows Php
Revenues Php
Cost of sales Php
Selling expenses Php
G&A expenses Php
Annual depreciation Php
Earnings before interest and taxes Php
Income tax Php
Add back depreciation Php
Terminal cash flow Php
 Equipment selling price Php
Equipment book value, end Php
Gain (loss) on asset sale Php
Tax benefit (loss) on asset sale Php
Return of working capital investment Php
Net cash flows Php

Net present value at 20.0% #REF!

Internal rate of return #REF!
Payback period -

Supporting schedules
Straight-line depreciation
Equipment depreciable value, beg.
 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

10,000 11,000 12,100 13,310 14,641

1.13 1.18 1.24 1.30 1.37

#REF! #REF! #REF! #REF! #REF!

#REF!
(8,050,000)
#REF!
#REF!
(200,000)
#VALUE!
#REF! #REF! #REF! #REF! #REF!
11,260 13,005 15,021 17,349 20,039
(4,842) (5,592) (6,459) (7,460) (8,617)
(946) (1,092) (1,262) (1,457) (1,683)
#REF! #REF! #REF! #REF! #REF!
(825,000) (825,000) (825,000) (825,000) (825,000)
#REF! #REF! #REF! #REF! #REF!
#REF! #REF! #REF! #REF! #REF!
 825,000 825,000 825,000 825,000 825,000
#VALUE!
100,000
(4,125,000)
(4,025,000)
1,449,000
#VALUE!
#REF! #REF! #REF! #REF! #REF! #REF!
#REF! #REF! #REF! #REF! #REF! #REF!
- - - - -