10%

Year CFs PV CFs PV

0 -2,000 -2000
1 330 300 13.7 12.45455
2 330 272.7273 13.7 11.32231
3 330 247.9339 13.7 10.29301
4 330 225.3944 13.7 9.357284
5 330 204.904 13.7 8.506622
6 330 186.2764 13.7 7.733293
7 330 169.3422 13.7 7.030266
8 1,000 466.5074 13.7 6.391151
73.08559 73.08849
The Investment Detective
Cash flows
Discount rate Year Project 1 Project 2 Project 3 Project 4
10.00% 0 -2,000 -2,000 -2,000 -2,000
13.7 1 330 1,666 - 160
13.7 2 330 334 - 200
13.7 3 330 165 - 350
13.7 4 330 - - 395
13.7 5 330 - - 432
13.7 6 330 - - 440
13.7 7 330 - - 442
13.7 8 1,000 - - 444
9 - - - 446
10 - - - 448
11 - - - 450
12 - - - 451
13 - - - 451
14 - - - 452
15 - - 10,000 -2,000
8 3 15 15

S CF Ben. 3,318 2,168 10,015 3,576

CF Excess 1,310 165 8,000 1,561

Payback 7 2 15 6

PV(CF) Project 1 Project 2 Project 3 Project 4

-2,000.00 -2,000.00 -2,000.00 -2,000.00
0.9090909 300.00 1,514.55 - 145.45
0.8264463 272.73 276.03 - 165.29
0.7513148 247.93 123.97 - 262.96
0.6830135 225.39 - - 269.79
0.6209213 204.90 - - 268.24
0.5644739 186.28 - - 248.37
0.5131581 169.34 - - 226.82
0.4665074 466.51 - - 207.13
5.3349262 - - - 189.15
13.70 - - - 172.72
- - - 157.72
- - - 143.70
- - - 130.64
- - - 119.03
- - 2,393.92 -478.78
S PV(CF) 2,073.09 1,914.55 2,393.92 2,228.22
NPV 73.09 -85.45 393.92 228.22

IRR 10.87% 6.31% 11.33% 12.33%

Profitability 3.65% -4.27% 19.70% 9.21%

Index
Equiv. Annuity 13.70 -34.36 51.79 30.01

Equiv. Annuity to Inf. 136.99 -343.63 517.90 300.05

PV Index 1.037 0.957 1.197 1.092

Cash flows
Project 5 Project 6 Project 7 Project 8 Possible description
-2,000 -2,000 -2,000 -2,000 Project 1 Leasing or Partially Amortizing Bond
280 2,200 1,200 -350 Project 2 Advertising campaign
280 - 900 -60 Project 3 Private Equity or Zero-Coupon Bond
280 - 300 60 Project 4 Nuclear-power plant
280 - 90 350 Project 5 Leasing with 0 terminal value or Home mortga
280 - 70 700 Project 6 One-year bond
280 - - 1,200 Project 7 Mine
280 - - 2,400 Project 8 Orchard
280 - - -
280 - - -
280 - - -
280 - - -
280 - - -
280 - - -
280 - - -
280 - - -
15 1 5 7

4,215 2,201 2,565 4,307

2,200 200 560 2,300

8 1 2 7

Project 5 Project 6 Project 7 Project 8 Rates Project 1 Project 2 Project 3

-2,000.00 -2,000.00 -2,000.00 -2,000.00 0% 1310 165 8000
254.55 2,000.00 1,090.91 -318.18 2% 989.2474 109.8469 5430.147
231.40 - 743.80 -49.59 4% 711.3682 57.40925 3552.645
210.37 - 225.39 45.08 6% 469.5982 7.494106 2172.651
191.24 - 61.47 239.05 8% 258.371 -40.07392 1152.417
173.86 - 43.46 434.64 10% 73.08559 -85.45455 393.9205
158.05 - - 677.37 12% -90.07711 -128.7935 -173.0374
143.68 - - 1,231.58 14% -234.3003 -170.224 -599.0352
130.62 - - - 16% -362.2479 -209.8682 -920.7299
118.75 - - - 18% -476.1577 -247.8379 -1164.84
107.95 - - - 20% -577.9167 -284.2361 -1350.945
98.14 - - - 22% -669.1217 -319.1576 -1493.473
89.22 - - - 24% -751.1292 -352.6896 -1603.106
81.11 - - - 26% -825.0949 -384.9128 -1687.794
73.73 - - - 28% -892.007 -415.9019 -1753.481
67.03 - - - 30% -952.7135 -445.726 -1804.634
2,129.70 2,000.00 2,165.04 2,259.96
129.70 - 165.04 259.96

11.12% 10.00% 15.26% 11.96%

Mutually Exclus

6.49% 0.00% 8.25% 10.98% 3000

2500

2000

1500

1000
 Mutually Exclus

3000

2500

2000

1500
17.05 - 43.54 53.40
1000
170.52 - 435.37 533.97
500

NPV
1.065 1.000 1.083 1.1098 0

-500

-1000

-1500

-2000

0% 2% 4% 6% 8% 10
%
12
%
14
%
16

Discount ra
mortizing Bond

o-Coupon Bond

al value or Home mortgage

Project 4 Project 5 Project 6 Project 7 Project 8

1561 2200 200 560 2300
1252.954 1597.794 156.8627 470.7664 1768
962.0346 1113.148 115.3846 387.1129 1308.039
693.3824 719.4297 75.4717 308.5546 909.1919
448.8168 396.654 37.03704 234.6592 562.3647
228.222 129.7023 0 165.0409 259.9581
30.41123 -92.95794 -35.71429 99.35364 -4.399229
-146.3406 -280.193 -70.17544 37.28684 -236.0677
-303.9748 -438.8723 -103.4483 -21.43922 -439.5719
-444.4579 -574.3583 -135.5932 -77.07695 -618.7429
-569.6755 -690.8677 -166.6667 -129.8547 -776.8347
-681.3754 -791.7398 -196.7213 -179.9793 -916.6191
-781.1447 -879.6377 -225.8065 -227.6389 -1040.464
-870.4035 -956.6992 -253.9683 -273.0045 -1150.398
-950.4107 -1024.652 -281.25 -316.2322 -1248.162
-1022.275 -1084.901 -307.6923 -357.4643 -1335.258

Mutually Exclusive Projects 7 & 8

 Mutually Exclusive Projects 7 & 8

Project 7
Project 8

8% % % % % % % % % % % %
10 12 14 16 18 20 22 24 26 28 30

Discount rate
The Investment Detective
Year 0 1 2 3
CFs NPV -2000 160 200 350
-30% -205,140.73 -2,000.00 228.57 408.16 1,020.41
-28% -121,450.91 -2,000.00 222.22 385.80 937.71
-26% -70,987.29 -2,000.00 216.22 365.23 863.72
-24% -40,511.02 -2,000.00 210.53 346.26 797.31
-22% -22,144.41 -2,000.00 205.13 328.73 737.54
-20% -11,154.26 -2,000.00 200.00 312.50 683.59
-18% -4,672.37 -2,000.00 195.12 297.44 634.78
-16% -948.13 -2,000.00 190.48 283.45 590.51
-14% 1,093.25 -2,000.00 186.05 270.42 550.27
-12% 2,114.44 -2,000.00 181.82 258.26 513.59
-10% 2,525.04 -2,000.00 177.78 246.91 480.11
-8% 2,578.28 -2,000.00 173.91 236.29 449.47
-6% 2,430.28 -2,000.00 170.21 226.35 421.39
-4% 2,176.72 -2,000.00 166.67 217.01 395.60
-2% 1,875.50 -2,000.00 163.27 208.25 371.87
0% 1,561.00 -2,000.00 160.00 200.00 350.00
2% 1,252.95 -2,000.00 156.86 192.23 329.81
4% 962.03 -2,000.00 153.85 184.91 311.15
6% 693.38 -2,000.00 150.94 178.00 293.87
8% 448.82 -2,000.00 148.15 171.47 277.84
10% 228.22 -2,000.00 145.45 165.29 262.96
12% 30.41 -2,000.00 142.86 159.44 249.12
14% -146.34 -2,000.00 140.35 153.89 236.24
16% -303.97 -2,000.00 137.93 148.63 224.23
18% -444.46 -2,000.00 135.59 143.64 213.02
20% -569.68 -2,000.00 133.33 138.89 202.55
22% -681.38 -2,000.00 131.15 134.37 192.75
24% -781.14 -2,000.00 129.03 130.07 183.57
26% -870.40 -2,000.00 126.98 125.98 174.97
28% -950.41 -2,000.00 125.00 122.07 166.89
30% -1,022.27 -2,000.00 123.08 118.34 159.31

Multiple IRR: Project 4

4,000.00

2,000.00

-
-18%

-14%

-12%

-10%

-8%

-6%

-4%

0%

4%
-20%

-16%

-2%

2%

6%

8%

-2,000.00
NPV

-4,000.00

-6,000.00

-8,000.00

-10,000.00
 -

-18%

-14%

-12%

-10%

-8%

-6%

-4%

0%

4%
-20%

-16%

-2%

2%

6%

8%
-2,000.00

NPV
-4,000.00

-6,000.00

-8,000.00

-10,000.00

-12,000.00

Discount rate
 4 5 6 7 8 9 10 11 12
395 432 440 442 444 446 448 450 451
1,645.15 2,570.36 3,739.94 5,367.05 7,701.91 11,052.30 15,859.80 22,758.00 32,583.67
1,469.83 2,232.65 3,158.33 4,406.51 6,147.85 8,577.14 11,966.11 16,693.79 23,237.35
1,317.26 1,946.82 2,679.55 3,637.48 4,937.75 6,702.69 9,098.31 12,349.90 16,726.15
1,183.98 1,703.79 2,283.34 3,018.05 3,989.09 5,272.45 6,968.54 9,210.07 12,145.45
1,067.13 1,496.27 1,953.82 2,516.29 3,240.61 4,173.34 5,374.42 6,921.05 8,892.86
964.36 1,318.36 1,678.47 2,107.62 2,646.45 3,322.96 4,172.33 5,238.69 6,562.91
873.66 1,165.24 1,447.34 1,773.07 2,172.06 2,660.79 3,259.41 3,992.64 4,879.89
793.38 1,032.97 1,252.50 1,497.85 1,791.22 2,142.01 2,561.45 3,062.95 3,654.48
722.11 918.31 1,087.58 1,270.38 1,483.87 1,733.20 2,024.39 2,364.45 2,755.47
658.67 818.60 947.45 1,081.54 1,234.59 1,409.26 1,608.61 1,836.13 2,091.15
602.04 731.60 827.94 924.11 1,031.44 1,151.20 1,284.85 1,433.99 1,596.86
551.37 655.46 725.65 792.33 865.13 944.59 1,031.33 1,126.02 1,226.66
505.92 588.63 637.80 681.60 728.38 778.37 831.76 888.80 947.64
465.06 529.82 562.12 588.20 615.48 644.01 673.85 705.06 736.07
428.25 477.92 496.70 509.14 521.88 534.93 548.30 561.99 574.73
395.00 432.00 440.00 442.00 444.00 446.00 448.00 450.00 451.00
364.92 391.28 390.71 384.79 378.95 373.19 367.52 361.92 355.61
337.65 355.07 347.74 335.88 324.43 313.35 302.65 292.31 281.69
312.88 322.82 310.18 293.96 278.57 263.99 250.16 237.05 224.13
290.34 294.01 277.27 257.90 239.88 223.11 207.51 193.00 179.10
269.79 268.24 248.37 226.82 207.13 189.15 172.72 157.72 143.70
251.03 245.13 222.92 199.94 179.32 160.83 144.24 129.36 115.76
233.87 224.37 200.46 176.64 155.65 137.15 120.85 106.48 93.61
218.15 205.68 180.59 156.39 135.43 117.28 101.55 87.94 75.98
203.74 188.83 162.99 138.75 118.12 100.55 85.60 72.86 61.89
190.49 173.61 147.36 123.35 103.26 86.44 72.35 60.56 50.58
178.30 159.84 133.44 109.88 90.47 74.49 61.33 50.50 41.48
167.07 147.36 121.04 98.06 79.43 64.35 52.13 42.23 34.13
156.72 136.03 109.96 87.67 69.89 55.72 44.42 35.41 28.17
147.15 125.73 100.04 78.51 61.62 48.36 37.95 29.78 23.32
138.30 116.35 91.16 70.44 54.43 42.06 32.50 25.11 19.36

R: Project 4
-4%

0%

4%

10%

12%

14%

18%

20%
-2%

2%

6%

8%

16%
 -4%

-2%

count rate
0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%
 13 14 15
451 452 -2000
46,548.11 66,644.74 -421,268.90
32,274.10 44,924.52 -276,084.83
22,602.90 30,612.19 -183,043.45
15,980.85 21,074.06 -122,694.79
11,401.10 14,649.20 -83,101.90
8,203.64 10,277.29 -56,843.42
5,951.09 7,273.52 -39,248.42
4,350.57 5,190.73 -27,342.66
3,204.03 3,733.88 -19,211.14
2,376.30 2,706.33 -13,607.86
1,774.29 1,975.80 -9,713.87
1,333.32 1,452.48 -6,985.74
1,008.13 1,074.85 -5,059.55
766.74 800.46 -3,689.45
586.46 599.75 -2,707.94
451.00 452.00 -2,000.00
348.64 342.56 -1,486.03
270.86 261.02 -1,110.53
211.45 199.92 -834.53
165.83 153.89 -630.48
130.64 119.03 -478.78
103.36 92.49 -365.39
82.11 72.19 -280.19
65.50 56.59 -215.85
52.45 44.54 -167.03
42.15 35.20 -129.81
34.00 27.93 -101.31
27.52 22.25 -79.38
22.35 17.78 -62.44
18.22 14.26 -49.30
14.89 11.48 -39.07
The Investment Detective
Cash flows
Discount rate Year Project 1 Project 2 Project 3 Project 4
10.00% 0 -2,000 -2,000 -2,000 -2,000
13.7 1 330 1,666 - 160
13.7 2 330 334 - 200
13.7 3 330 165 - 350
13.7 4 330 - - 395
13.7 5 330 - - 432
13.7 6 330 - - 440
13.7 7 330 - - 442
13.7 8 1,000 - - 444
9 - - - 446
10 - - - 448
11 - - - 450
12 - - - 451
13 - - - 451
14 - - - 452
15 - - 10,000 -2,000
8 3 15 15

S CF Ben. 3,310 2,165 10,000 3,561

CF Excess 1,310 165 8,000 1,561

Payback 7 2 15 6

PV(CF) Project 1 Project 2 Project 3 Project 4

-2,000.00 -2,000.00 -2,000.00 -2,000.00
0.9090909 300.00 1,514.55 - 145.45
0.8264463 272.73 276.03 - 165.29
0.7513148 247.93 123.97 - 262.96
0.6830135 225.39 - - 269.79
0.6209213 204.90 - - 268.24
0.5644739 186.28 - - 248.37
0.5131581 169.34 - - 226.82
0.4665074 466.51 - - 207.13
5.3349262 - - - 189.15
13.70 - - - 172.72
- - - 157.72
- - - 143.70
- - - 130.64
- - - 119.03
- - 2,393.92 -478.78
S PV(CF) 2,073.09 1,914.55 2,393.92 2,228.22
NPV 73.09 -85.45 393.92 228.22

IRR 10.87% 6.31% 11.33% 12.33%

Profitability 3.65% -4.27% 19.70% 9.21%

Index
Equiv. Annuity 13.70 -34.36 51.79 30.01

Equiv. Annuity to Inf. 136.99 -343.63 517.90 300.05

PV Index 1.037 0.957 1.197 1.092

Cash flows
Project 5 Project 6 Project 7 Project 8 Possible description
-2,000 -2,000 -2,000 -2,000 Project 1 Leasing or Partially Amortizing Bond
280 2,200 1,200 -350 Project 2 Advertising campaign
280 - 900 -60 Project 3 Private Equity or Zero-Coupon Bond
280 - 300 60 Project 4 Nuclear-power plant
280 - 90 350 Project 5 Leasing with 0 terminal value or Home mortga
280 - 70 700 Project 6 One-year bond
280 - - 1,200 Project 7 Mine
280 - - 2,250 Project 8 Orchard
280 - - -
280 - - - 11%
280 - - -
280 - - -
280 - - -
280 - - -
280 - - -
280 - - -
15 1 5 7

4,200 2,200 2,560 4,150

2,200 200 560 2,150

8 1 2 7

Project 5 Project 6 Project 7 Project 8 Rates Project 1 Project 2 Project 3

-2,000.00 -2,000.00 -2,000.00 -2,000.00 0% 1310 165 8000
254.55 2,000.00 1,090.91 -318.18 2% 989.2474 109.8469 5430.147
231.40 - 743.80 -49.59 4% 711.3682 57.40925 3552.645
210.37 - 225.39 45.08 6% 469.5982 7.494106 2172.651
191.24 - 61.47 239.05 8% 258.371 -40.07392 1152.417
173.86 - 43.46 434.64 10% 73.08559 -85.45455 393.9205
158.05 - - 677.37 12% -90.07711 -128.7935 -173.0374
143.68 - - 1,154.61 14% -234.3003 -170.224 -599.0352
130.62 - - - 16% -362.2479 -209.8682 -920.7299
118.75 - - - 18% -476.1577 -247.8379 -1164.84
107.95 - - - 20% -577.9167 -284.2361 -1350.945
98.14 - - - 22% -669.1217 -319.1576 -1493.473
89.22 - - - 24% -751.1292 -352.6896 -1603.106
81.11 - - - 26% -825.0949 -384.9128 -1687.794
73.73 - - - 28% -892.007 -415.9019 -1753.481
67.03 - - - 30% -952.7135 -445.726 -1804.634
2,129.70 2,000.00 2,165.04 2,182.98
129.70 - 165.04 182.98

11.12% 10.00% 15.26% 11.41%

Mutually Exclus

6.49% 0.00% 8.25% 7.73% 3000

2500

2000

1500

1000
 Mutually Exclus

3000

2500

2000

1500
17.05 - 43.54 37.59
1000
170.52 - 435.37 375.86
500

NPV
1.065 1.000 1.083 1.0773 0

-500

-1000

-1500

-2000

0% 2% 4% 6% 8% 10
%
12
%
14
%
16

Discount ra
mortizing Bond

o-Coupon Bond

al value or Home mortgage

Project 4 Project 5 Project 6 Project 7 Project 8

1561 2200 200 560 2300
1252.954 1597.794 156.8627 470.7664 1768
962.0346 1113.148 115.3846 387.1129 1308.039
693.3824 719.4297 75.4717 308.5546 909.1919
448.8168 396.654 37.03704 234.6592 562.3647
228.222 129.7023 0 165.0409 259.9581
30.41123 -92.95794 -35.71429 99.35364 -4.399229
-146.3406 -280.193 -70.17544 37.28684 -236.0677
-303.9748 -438.8723 -103.4483 -21.43922 -439.5719
-444.4579 -574.3583 -135.5932 -77.07695 -618.7429
-569.6755 -690.8677 -166.6667 -129.8547 -776.8347
-681.3754 -791.7398 -196.7213 -179.9793 -916.6191
-781.1447 -879.6377 -225.8065 -227.6389 -1040.464
-870.4035 -956.6992 -253.9683 -273.0045 -1150.398
-950.4107 -1024.652 -281.25 -316.2322 -1248.162
-1022.275 -1084.901 -307.6923 -357.4643 -1335.258

Mutually Exclusive Projects 7 & 8

 Mutually Exclusive Projects 7 & 8

Project 7
Project 8

8% % % % % % % % % % % %
10 12 14 16 18 20 22 24 26 28 30

Discount rate