Page 364 - F2 - MA Integrated Workbook STUDENT 2018-19
P. 364
Chapter 14
Test your understanding 6
Project A Project B
Year Discount Cash flow PV Cash flow PV
factor 10% $000 $000 $000 $000
0 (45) (45) (10) (10)
1 0.909 20 18.18 5 4.55
2 0.826 15 12.39 4 3.30
3 0.751 10 7.51 3 2.25
4 0.683 10 6.83 2 1.37
5 0.621 12 7.45 3 1.86
NPV = 7.36 NPV = 3.33
Test your understanding 7
IRR = 10 + [13,725 / (13,725 – –40,520)] × (15 – 10)
IRR = 10 + [13725 / 54245] × 5
IRR = 11.3%
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