Categories: Theory Question

EME 302 Theory Questions: Payback and NPV Analysis

300 Level Operations Management In Educational Practice exam questions and detailed answers. Download the answers in document format. Correct, detailed, and straightforward answers.

Questions:

Table below shows six profit-oriented projects established by a higher institution in Oyo State with capital cost flow and benefits derivable from the projects.

Table showing flow of Capital Cost and Benefits from six projects

Year A B C D E F
0 -1000.00 -1000.00 -1000.00 -1000.00 -1000.00 -1000.00
1 300.00 400.00 400.00 200.00 500.00 300.00
2 300.00 300.00 300.00 200.00 500.00 300.00
3 400.00 300.00 300.00 200.00 500.00 300.00
4 400.00 400.00 400.00 200.00 700.00
5 300.00 300.00 300.00 400.00
6 300.00 1000.00

With this information and returns/benefits in Naira terms, determine:

5a The Payback for each project

5b Given the bank interest rate of 10%, determine the Net Present Value (NPV) for Projects A, B, and F

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Fred N

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