1. Explain IRR, NPV and Payback Period?

2. Explain the function of weighted cost of capital?

3. Explain the condition of the company if several financial indicators occur as follows:
• Payback Period is longer than the bank loan period
• Positive NPV
• IRR is greater than the loan interest rate
Will you accept the project?

4. Explain how to find IRR easily?

Case:
1. The ABC company has two very good businesses. Each has an initial investment of $ 25,000 with each cashflow as follows:

Year; Business  1 CF  ; Business 2 CF
  1          7500                       7500
  2          7000                       7500
  3          6000                       7500
  4          5000                       7500
  5          3500                       7500

If it is known that the cost of capital is 12.5%, then calculate how much:
a. Payback Period and the NPV.
b. In your opinion, which business was chosen between Business 1 and Business 2?


2. ABC CFO company wants to plan to buy a generator at a price of 1.6 billion. The alternatives are as follows, buy directly 1.6 billion or rent at a price of 30 million per month. Assumption of a deposit interest of 7% a year. In your opinion, which one to choose?