Abcfdfd

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EXAMMINATION 1
The 2013 NPUST-TNU MBA Program
Department of Business Administration
National Ping Tung University of Science and Technology
Student ID: Name: Nguyen Minh Hue (Victoria)

1. d
2. a
3. a
Feedback:
[pic]
In which: Co – Initial Invesment C - Cash Flow r - Discount Rate T - Time
=> [pic][pic] = - $59,000 + $22,272.7273 + $20,247.9339 + $21,412.4718 = $4,933.13
4. a
5. d
Feedback: CFo = $810,000 + $1,200,000 = $2,010,000
6. e
7. d
8. c
Feedback: Opportunity cost = $190,000 - $10,000 = $180,000
9. c
Feedback: OCF = Net income after tax + Depreciation = [EBIT x (1-T)] + [(Cost/Life) x T] = [($60,000 - $51,000) x (1-35%)] + [($40,000/4) x 35%] = $9,350
10. b
11. a
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The total cash flow in Year 5 will be: Year 5 cash flow = $10,160,300 – 160,000 = $10,000,300 The value of the perpetual cash flows beyond Year 5 at Year 5 is a growing perpetuity. So, the value of the cash flows in Year 5 will be: PV5 = CF6 / (R – g) PV5 = ($10,000,300 × 1.04) / (.11 – .04) PV5 = $148,575,885.71 So, the cash flows for the project are:

| |Year 0 |Year 1 |Year 2 |Year 3 |Year 4 |Year5 | | |OCF | |$750,000 |$4,218,800 |$7,335,300 |$9,102,100 |$10,160,300 | | |Capital spending |–$50,000,000 |–25,000,000 | | | | | | |Net working capital | |–1,200,000 |–960,000 |–640,000 |–400,000 |–160,000 | | |Terminal value | | | | | |148,575,886 | | |Total cash flows |–$50,000,000 |–$25,450,000 |$3,258,800 |$6,695,300 |$8,702,100 |$158,576,186 | | So the NPV of the project is: NPV = –$50,000,000 – $25,450,000/(1.11) + $3,258,800/(1.11)2 + $6,695,300/(1.11)3 + $8,702,100/(1.11)4 +

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