Exercise 1:

Company A plans to invest to expand production scale after considering projects A and B,
the expected income streams of the two projects are as follows (unit in million VND)
Year 1 Year 2 Year 3 Year 4 Year 5
Project A 130 70 150 274 420
Project B 30 106 220 336 424
Based on NPV spending, which option do you recommend the company choose?
Knowing that the initial investment cost of project A is 150 million VND, project B is 600
million VND, and the capital cost of the two projects is 8%, calculating the total investment
capital, the salvage value is zero.
Exercise 2:
The initial investment capital for 1 hectare is 90 million VND, annual cost is 40 million
VND. The 3rd - 6th year yields an average yield of 2,500 kg/ha. From the 7th year onwards,
the yield reaches 6,000 kg/ha and the harvest is stable for up to 15 years, with a capital cost
of 5%. In your opinion, should we invest in this project or not (according to NPV, NFV,
NAV methods) with an average lychee price of 15,000 VND/kg.
Exercise 3:
The company is considering a 4-year project. Related information: initial investment
capital is 10 billion. At the beginning of year 2, working capital must be supplemented by
0.5 billion. This working capital amount will be recovered in the final year of the project.
During each year from year 1 to year 4, the project will generate a cash flow of 2
billion/year. Should the company undertake the project? Give i = 10%.
Exercise 4:
a. Use the present value NPV or future value NFV or NAV criteria to choose an option
b. Additional investment capital to calculate option selection
Year Option 1 Option 2
Initial investment 0 90 90
Income 1 40 40
Income 2 40 30
Income 3 20 40
Income 4 30 20
Income 5 20 10
Salvage value 5 3 3
Rate of Return 10% 10%
 Additional investment 3 20 30
capital (question 1 b)

Exercise 5:
A business is considering two investment options as follows:
Unit: million VND
Option A Option B
Total initial investment capital 640 980
Operating time 4 year 6 year
Salvage value 0 50
Annual income 570 570
Know:
- Option A: The total annual cost of option A is 310 million VND.
- Option B: The cost for the first 2 years is only 200 million VND and 240 million VND
for the last 4 years.
With i = 15%, which investment option should the business choose?
a. Calculated according to NAV
b. Calculated according to the least common multiple of the operating time of the two
options.
Exercise 6
A sports equipment factory is considering two options to produce a new product with the
following characteristics:
Unit: million VND
Option A Option B
Total initial investment capital 1000 1700
Economic life 6 year 12 year
Salvage value 150 100
Annual income 900 900

The total annual cost of option A is 600 million VND in the first 3 years and 700 million
VND in the last 3 years. The total annual cost of option B is 600 million VND.
With i = 12%, should the business produce this product or not, and if so, which option
should it choose? Solve the problem in 2 ways:
a) Calculated according to NAV
b) Calculated according to the least common multiple of the operating time of the two
options.
Exercise 7
A business wants to open an additional product showroom, there are 2 options for choosing
a location as follows:
Unit: million VND
Location X Location Y
Total initial investment capital 950 840
Contract period 15 year 10 year
Salvage value 510 600
Annual cost 880 1000
Annual income 1.230 1.370
Assuming the initial investment capital is loan capital with an interest rate of i = 15%,
which location should the business choose? Solve the problem in 2 ways:
a) Calculated according to NAV
b) Calculated according to the least common multiple of the operating time of the two
options.
Exercise 8
A factory planning to invest in a steel rolling line has two suppliers offering prices as
follows:
Type X: has an initial value of 640 million VND, after 4 years of use it will have no salvage
value, the annual operating and maintenance cost is 330 million VND, bringing in an
average annual income of 590 million VND.
Type Y: Has an initial value of 980 million VND, after 6 years of use the salvage value is
50 million VND. This type still yields an average annual income of 590 million VND, but
the operating cost for the first 2 years is 220 million VND and for the last 4 years is 260
million VND.
With i = 15% per year. Which type should the factory invest in?
a) Calculated by NAV
b) Calculated by the least common multiple of the operating times of the 2 options?
Exercise 9:
Investment projects with data as shown in the following table. Calculate the IRR and
evaluate the project
Data
Initial investment capital 100
 Annual income 55
Annual cost 25
Interest rate 12%
Project lifespan 5

Exercise 10:
A project has a total investment capital at the start of production of 350 billion VND. The
projected annual revenue of the project is 115 billion VND, the annual operating cost
(excluding depreciation and interest) is 25 billion VND, the project's lifespan is 15 years,
and the salvage value at the end of the project's life is 2 billion. The discount rate of the
project is 15% per year.
Calculate:
a. NPV of the project?
b. Payback time (T)
c. IRR of the project?
Exercise 11:
A project has a total investment capital at the start of production of 3,500 million VND.
The revenue in the first year of the project is 500 million VND, and in the second year, it
is 550 million VND, from the third year onwards the project's revenue is expected to
stabilize at 950 million VND annually until the end of the project's life. The annual
operating cost (excluding depreciation and interest) of the project is 150 million VND.
The project's lifespan is 15 years. The salvage value at the end of the project's life is 10
million VND. The discount rate of the project is 16% per year.
Questions:
a. Should the project be invested in or not?
b. What is the maximum acceptable interest rate for borrowing capital?
Exercise 12:
A company is considering an investment project to improve the quality of its products.
The total investment capital for the project is 17,000 million VND and is sourced from
three different channels:
Source 1: Borrowing 10,500 million VND - term of 5 years - interest rate of 12% per
annum
Source 2: Borrowing 5,500 million VND - term of 5 years - interest rate of 14% per
annum
Source 3: Borrowing 1,000 million VND - term of 5 years - interest rate of 16% per
annum
If the project is implemented, the projected annual revenue is 6,500 million VND. The
estimated costs (excluding depreciation and interest payments) for the first year are 2,900
million VND, for the second year are 3,100 million VND, and then stabilize at 3,300
million VND. If the project's lifespan is 15 years with a maintenance overhaul every 5
years, costing 200 million VND each time.
Questions:
1. What is the NPV of the project?
2. What is the maximum acceptable interest rate for the project?
Exercise 13:
To ensure irrigation for agricultural production in commune A, it is planned to invest in
the construction of an irrigation system with the following costs: Initial cost is 12 billion
VND, annual maintenance cost is 140 million VND (excluding depreciation and interest
on borrowed capital). The lifespan of the construction is 30 years, with major repairs
needed every 15 years costing 500 million VND each time. Due to the construction, the
annual income from farming of local farmers increases by 1.4 billion VND. The interest
rate for borrowing capital to build the construction is 8% per year. Please calculate the
basic indicators (NPV, IRR, and T) to evaluate the financial efficiency of the project.
Exercise 14:
To welcome tourists to Quang Ninh Province annually, the Provincial People's
Committee of Quang Ninh has decided to implement the project "Renovation and
construction of a new tourist and entertainment area." The project is developed with the
following costs and revenues:
Estimated compensation and resettlement costs are around 20 million USD, construction
and equipment costs are approximately 60 million USD, and other investment costs are
about 12 million USD.
Annual expected revenue is around 50 million USD. The annual cost to maintain this
revenue is estimated to be 60% of the revenue (excluding depreciation and interest
expenses).
The project requires periodic repairs every 15 years, costing 10 million USD each time.
The business plan for the project spans 30 years. After cessation of operations, the
salvage value is estimated to be 20 million USD. The market interest rate is 12% per
year.
Please calculate the financial performance indicators of the project.
Exercise 15:
A hotel construction investment project has a total investment capital calculated at the
start of the project's operation of 40 billion VND. Of this, self-capital is 20 billion VND
with an opportunity cost of capital of 18% per annum, and borrowed capital is 20 billion
VND with an interest rate of 12% per annum. The projected annual revenue of the project
is estimated at 24 billion VND. The annual costs (excluding depreciation) are 40% of the
revenue. After the project ceases operation, the salvage value is 2.5 billion VND. The
project's lifespan is 30 years. Calculate:
1. The net present value (NPV) of the project's lifetime net income.
2. The payback time (T) of the project's initial investment.