DPM$3201$ Public Programme Planning Worksheet

You have the opportunity to purchase office equipment for $$200,000.$ You have an expected income of $$10,000$ per year in cash flows for four years. At the end of four years, you anticipate selling the office equipment for $$350,000.$ Using a $15\%$ discount rate, what is the NPV of the venture?

The RDC$,$ Region $6$ plans to buy equipment for $$150,000,$ half of which is due on delivery, with the balance due exactly one year later. The year$-$end cash inflows are expected to be $$25,000$ per annum for five years. After exactly five years, the equipment will be sold for $$50,000.$ If the company has to borrow at $14\%$ per annum, analyse whether it is a worthwhile purchase?

Your company uses a machine in its production department which costs $$25000$ at the beginning of $2010.$ The machine will be replaced after five years usage by a new machine at the end of $2015.$ During the five years of operation of the machine it is estimated that the net cash inflow at the beginning of each year will be as follows:

$\backslash$table$[[,$Year,$2011,2012,2013,2014,2015],[$Net cash $($$$),6600,6000,4500,(1400),12000,],[$inflow$,,,,,,]]$

a$)$ Complete and Calculate the net present value of the net cash flows over the five years of operation of the machine at the $10\%$ discount rate.

$\backslash$table$[[$Year$,$Outflows,Inflows,Flows,$10\%,$Flows$],[2010,-25000,0,-25000,1,-25000],[2011,,,,,],[2012,,,,,],[2013,,-1400,-1400,,],[2014,,,,,-],[2015,,,,,]]$