investment appraisal

5,000 x annuity df for 8 years = 24,000 So 8 year annuity d.f. = 24,000 / 5,000 = 4.800 If you look in the annuity tables along the 8 year row, then the rate of interest that gives 4.800 is 13%

hello sir a company has 3 projects with the following initial cost and npv Project A : initial cost 20000 ; NPV 2000 Project B ; intial cost 30000 ; NPV 2400 Project C ; initial cost 10000; NPV 1200 capital available for lim,ited 40000 if project are divisible what is the maximum NPV can be acheved ?

I think the answer is 4000? 100% project C, same with Project A which means only 10,000 left for project B so only 800 profit there

a payment has agreed to lease for 8 yr with an equal annual payment payable at start of each yr npV of agreement 52000 cost of capital 10% what is a annual lease payment ?

thanx sir

machine cost 7200 runing cost as follows y1 7200 y2 9600 y312000 estimated scrap value as follows y1 24000 y2 16600 y3 9600 cost of capital is 10% what is annual equlent cost if replace machine every 2 yr /

Aleksandrs is correct with regard to the capital rationing problem.

For the lease problem: Suppose the lease payment is X per year. The first payment is immediate (it is paid at the start of the year), so the PV is X. There are then 7 payments. The PV of these is 4.868X (4.868 is the 7 year annuity factor). So the total PV is X + 4.868X = 5.868X This must be equal to 52,000 So X = 52,000 / 5.868 = $8862

For the replacement problem: The PV of the first machine is 7,963 So the EAC = 7963 / 1.736 = $4,587