Comments

  1. avatar says

    Could we in the exam say that the amount of 100$ leftover can be used as working capital in the projects so as to avoid the trap of fast expansion and working capital cash management?

  2. avatar says

    Hey all.

    I have a question regarding investment appraisal,
    When do I add Working Capital Recovery in DCF?.
    I have noticed that some times it is added and sometimes it is just ignored.?

  3. avatar says

    thanks f9 has been eased for me instead of calming things i real understand the concept open tuition is far better than these colleges were we pay heavily and get sub standard lectures with out you i don’t know how i would have made it thankes

    • Avatar of Mahoysam says

      Completely agree!!!! I have got no problem with paying money, in fact my study is half funded by my company, yet am so not gonna pay to have less quality lectures, that would be stupid! I can understand paying for a higher quality, but less quality! O.o! Opentuition is far better than the institute I was going to, it feels bad to be paying and then come to a free resource to understand everything you did not understand in the classes you have been paying for!!

  4. Avatar of louis06111 says

    Dear tutor,
    Regarding part(c) of Eg1, I am confused.
    We choose ABD combination which gives the highest total NPV, but why don’t we analyse the efficiency as we do in part(b)?
    ABC: 1400 input, we get 143 output, the efficiency is 10.21%;
    ABD: 1500 input, 157 output, 10.46%;
    ACD: 1200 input, 136 output, 11.33%;
    BCD: 1300 input, 143 output, 11.00%.
    (OMG, I hope I’ve made it clear~)
    From my view I may think ACD is the most efficient investment combinations and I am wondering whether I got something wrong. Can you please help check my thought? Thx a lot.

    • Avatar of tameablebunchy says

      @louis06111,

      part B is infinitely divisible, this means you can do a fraction of a project, therefore you start with the highest NPV first and so forth what capital is left is invested into a fraction of the project B which 66.6666%.

      With part C, capital is restricted to 1600 so you choose the best option that will return highest NPV per project because these projects are non infinitely divisible you have to choose the best option so you only have to borrow or use the amount of cash that is needed.

      The key is to find the highest return/NPV for investment

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