# Finance Assignment 1

3173 words 13 pages
JWI 530: Financial Management I

Assignment 2: Management Accounting Application

Due Week 10, Day 7 (Weight: 22.5%)

In this assignment you will demonstrate your understanding of capital investment techniques by evaluating the following three case studies.
The homework answers and all this homework help was offered at and you should not submit or make it your own. We provide homework answers at http://allhomeworktutors.com/ and the work may have already be submitted for marking.
Case Analysis 1 – Weight 20% of total assignment

You work for a small, local telecommunications company. In five years, the company plans to undertake a major upgrade to its servers and other IT infrastructure.

Our PBP is therefore 2 years and 4 months.
Discounted PBP
Year Amount PVIF\$1=1/(1+r )^n Discounted amount accumulated
1 65,000 1.1 59,090.91 59,090.91
2 65,000 1.21 53,719.00 112,809.91
3 65,000 1.331 48,835.46 161,645.37
The PBP is 150,000-112,809.91=37,190.09
Assuming the 48,835.46 was accrued evenly,37,190.09/4069.62=9.14
The PBP=2 years and 9.1 months.

Net Present value
Year amount PVIF\$1=1/(1+r)^n discounted amount accumulated
0 -150,000 1 -150,000 -150,000
1 65,000 1.1 59,090.91 59,090.91
2 65,000 1.21 53,719.00 112,809.91
3 65,000 1.331 48,835.46 161,645.37
NPV= -150,000+161,645.37=11,645.37

Internal Rate of Return
This is the rate at which NPV=0
This rate in this scenario is 14%
See excel for calculations

Part B. Saving Growth Scenario: BASE CASE but with 10% compounded annual savings growth in years 2 & 3.
Cash flows for the poroject
Year 0 -150,000
Year 1 65,000
Year 2 78,650
Year 3 86,515
Nominal PBP
Year amount accumulative
1 65,000 65,000
2 78,650 143,650
3 86,515 230,165
To get the exact PBP we calculate cumulative earnings for year 3
86,515/12=7,209.58
So the PBP is two years and approximately 1 month

Disocunted PBP
Year amount discounting factor amount cumulative
1 65,000 1.1 59,090.91 59,090.91
2 78,650 1.21 65,000 124,090.91
3 86,515 1.331 65,000 189,090.91
The

## Related

• ###### Entrepreneurial Finance Assignment 1
2535 words | 11 pages
• ###### Assignment Help
2014 words | 9 pages
• ###### Unit 2 MFRD AB Daniel
2224 words | 9 pages
• ###### F.C Case Study Harvard Business School
14024 words | 57 pages
• ###### Managing Financial Resources
1190 words | 5 pages
• ###### Ldr 531 Week 5 Individual Motivation Plan
864 words | 4 pages
• ###### ATHE Level 6 Management Specification2
12412 words | 50 pages
• ###### Hrm 517 Week 6 Assignment 1 Planning Document
911 words | 4 pages
• ###### Personal Development
2731 words | 11 pages
• ###### Sec 435 Week 3 Assignment 1 Business Security Posture Sec435 Week 3 Assignment 1 Business Security Posture
3028 words | 13 pages