EXERCISE $1$

Project requires an initial investment of $$243,000$ and it is expected to generate a cash inflow of

$$50,000$ each month for $12$ months. Assume that the salvage value of the project is zero. The target

rate of return is $12\%$ per annum.

Calculate:

$1.$ NPV

$2.$ DPP$.$

$3.$ PI

Make a conclusion about the acceptability of the investment project.

EXERCISE $2$

An initial investment of $$8,320$ thousand on plant and machinery is expected to generate cash inflows

of $$3,411$ thousand, $$4,070$ thousand, $$5,824$ thousand and $$2,065$ thousand at the end of first, second,

third and fourth year respectively. At the end of the fourth year, the machinery will be sold for $$900$

thousand. Calculate NPV$,$ DPP$,$ PI of the investment if the discount rate is $18\%.$ Round your answer to

nearest thousand dollars. Make a conclusion about the acceptability of the investment project.