Literature Review on how childhood maltreatment have effect on children’s moral development, which includes moral reasoning and judgment
December 16, 2017
PAYBACK PERIOD THECHNIQUE
December 16, 2017

MBFN514: MANAGERIAL FINANCE: ASSIGNMENT
This course provides detailed critical treatment of the theory and practice of financial management within organizations. Topics covered include financial modeling, breakeven analysis, investment decision-making (NPV, IRR, etc.), capital budgeting and capital structure, working capital management, analysis of financial statements, and risk analysis.
Regarding investment decision making, there are techniques that are often applied to make financial investment decisions. These techniques include those that are sophisticated such as NPV, IRR and profitability index and those that are not sophisticated such as payback period and accounting rate of return. This assignment (midterm) requires students to use the NPV technique to make investment decisions.
Use the following information to answer the questions that follow.
RAK manufacturing company plans to invest in plant and equipment to expand its operating activities to be ready for Dubai EXPO 20-20. The plant and equipment will be useful for five (5) years only.
The plant and equipment will cost $100,000. RAK expects to receive the following net cash flows in the next five years.
 

YEARNET CASH FLOWS
$
170,000
240,000
320,000
415,000
530,000

 
The discount rate is expected to be 8%.
 
QUESTION 1                                                                                                            10 marks

  1. Calculate Net Present Value (NPV)* 2 marks
  2. Based on your answer in a) above: would you be willing to invest in RAK**? And why?

2 marks

  1. General question: What financial impact does a project that has a negative NPV have on the overall value of the firm? 2 marks.
  2. General question: Would you be willing to invest in a project that has a NPV of zero (0)? And why? Answer will be Yes , ……explanation required……               2 marks
  3. First list sophisticated investment techniques and so called naïve or not sophisticated investment techniques. Next discuss the differences between the two groups of these investment techniques?                                                                                2 marks

 

 

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