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Assignment 1 - Question File - PCFM - Fall 2022 31102022 103914pm

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45 views3 pages

Assignment 1 - Question File - PCFM - Fall 2022 31102022 103914pm

Uploaded by

Kennie's Fashionity
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

Assignment # 1 – Fall 2022

Project Cost & Finance Management (PCFM)


Assignment Given on: 31 October 2022 Due Date: 3 December 2022

Instructions to Attempt the Assignment

Please, read all the instructions carefully before attempting this assignment.

a. You are required to provide a handwritten solution, both the hard and the soft copies, of all the
questions/tasks given in the assignment. The soft copy (i.e. a pdf file containing the photos/images of the
handwritten solution) is to be uploaded on LMS latest by 11:45 PM on 3 December 2022, whereas, the hard
copy is to be submitted during the class on the same day.

b. Show all the steps / calculations of numerical questions.

c. Give reasons / explanation of your answers. Also, clearly mention if you make any assumption(s) along with
the justification(s) of making that assumption(s).

d. Please use the provided template for Question No. 1.

e. Please write your name, enrollment number and section on the first page of your assignment solution.

f. Three marks per day will be deducted on late submission of the assignment.

g. Three marks will be deducted in case of failing to follow the above instructions, such as not using the given
template or not mentioning your name, enrollment number and/or the section.

h. Present Value Interest Factor (PVIF) Table has been provided at the end of this assignment. You are advised
to use it, if and where applicable.

i. Copied / plagiarized work (of both who copied and who shared his/her answer with others) will be marked
zero and a disciplinary action will be initiated.

Page 1 of 3
Question No. 1 The project selection committee of ABC Pvt. Ltd. is evaluating three sets of project proposals,
with each set having two proposals, as shown below: (CLO2, CLO 4)

Project Proposals in Respective Set


Set
First Project of the Set Second Project of the Set
Set X Project A Project B
Set Y Project C Project D
Set Z Project E Project F
The committee has to choose one project from each set. The initial investment required for each project and the
Present Value of all Cash Inflows for each project are given below:
Project Proposals in Respective Set
First Project of Each Set Second Project of Each Set
Set
PV of all PV of all
Project ICOF Project ICOF
CIFs CIFs
Set X Project A (2 Million) 2.4 Million Project B (8 Million) 9.4 Million
Set Y Project C (600,000) 750,000 Project D (700,000) 870,000
Set Z Project E (3 Million) 3.5 Million Project F (7 Million) 7.7 Million

Considering the above information:


a. Compare the two projects given in each set and suggest which project selection method shall be used in
each case. Also, justify your answers / choice of the selected methods. (03 Marks)
b. Using the chosen methods in part “a” above, suggest which project from each set shall be selected and why.
(03 Marks)
c. Show calculations of the project selection method that you used in each case. (03 Marks)
Note: Please use the following template to answer the parts “a” & “b” of this question.
Part a Part b
Set Project
Why did you use Which project to Why this project
selection
this method? be selected? shall be selected?
method used
Set X
Set Y
Set Z

Question No. 2 (CLO 2, CLO 4)

a. You are trying to evaluate two project proposals, A & B. The NPV of proposal A is +2000 and that of
proposal B is +3000, whereas, the IRR of proposal A is 13.7% and that of proposal B is 12.5%. Assuming an
RRR of 11%, which project proposal among the two would you prefer and why? (01 Mark)
b. Which project selection method(s) will you prefer, if you want to consider the time value of money and take
into account all the cash flows till end of a project’s life and why? (01 Mark)
c. Consider two projects with equal initial cash outflows. The cash inflows of both the projects are also equal
but the timings of these inflows are different; such that for Project A, the larger inflows are during earlier
years and smaller inflows are expected during later years, whereas for Project B, the smaller inflows are
expected during earlier years and larger inflows are expected during later years. Which project will have
higher NPV and why? (01 Mark)
Page 2 of 3
Present Value Interest Factor (PVIF) Table

r%
5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20%
n

0 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000

1 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833

2 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694

3 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579

4 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482

5 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402

6 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335

7 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.354 0.333 0.314 0.296 0.279

8 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.327 0.305 0.285 0.266 0.249 0.233

9 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194

10 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162

Page 3 of 3

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