Financial Exercises 3: NPV and IRR - Versionsgeschichte

Wikimeister am 24. Januar 2013 um 17:10 Uhr

2013-01-24T17:10:46Z

← Nächstältere Version		Version vom 24. Januar 2013, 19:10 Uhr
Zeile 1:		Zeile 1:
	''by Clemens Werkmeister''		''by Clemens Werkmeister''
	<html><img src=""http://vg06.met.vgwort.de/na/40a695d872e3410c808113bcf92d2735"" width=""1"" height=""1"" alt=""""></html>		<html><img src="http://vg06.met.vgwort.de/na/40a695d872e3410c808113bcf92d2735" width="1" height="1" alt=""></html>

	<br/>		<br/>

Wikimeister am 12. Januar 2012 um 15:27 Uhr

2012-01-12T15:27:59Z

← Nächstältere Version		Version vom 12. Januar 2012, 17:27 Uhr
Zeile 14:		Zeile 14:
	The following table shows the investments (in year 0) and expected cash flows (years 1 to 3) for the projects A to D:<br/>		The following table shows the investments (in year 0) and expected cash flows (years 1 to 3) for the projects A to D:<br/>

	{\|align="~~center~~" border="1" cellpadding="3" cellspacing="0"		{\|align="left" border="1" cellpadding="3" cellspacing="0"
	\|- align="center"		\|- align="center"
	\|year \|\| A\|\| B\|\|C\|\|D		\|year \|\| A\|\| B\|\|C\|\|D
Zeile 26:		Zeile 26:
	\|3\|\| \|\| \|\|200\|\|-50		\|3\|\| \|\| \|\|200\|\|-50
	\|}		\|}
			<br style="clear:left;"/>

	a. Calculate the exact internal rates of return of projects A and B.<br/>		a. Calculate the exact internal rates of return of projects A and B.<br/>

Wikimeister: /* 1. NPV and NPV-function */

2012-01-10T17:00:53Z

1. NPV and NPV-function

← Nächstältere Version		Version vom 10. Januar 2012, 19:00 Uhr
Zeile 7:		Zeile 7:
	Project I requires an investment of 500 € and has expected cash flows of 300 € both in year 1 and 2. <br/>		Project I requires an investment of 500 € and has expected cash flows of 300 € both in year 1 and 2. <br/>
	a. Calculate the net present value ([[Kapitalwert\|NPV]]) assuming a [[Kalkulationszinssatz\|cost of capital]] of 10 %.<br/>		a. Calculate the net present value ([[Kapitalwert\|NPV]]) assuming a [[Kalkulationszinssatz\|cost of capital]] of 10 %.<br/>
	b. Plot a graph (NPV-function) showing the investment’s NPV for costs of capital between 0 % and 20 %.<br/>		b. Plot a graph ([[Interner Zinsfuß\|NPV-function]]) showing the investment’s NPV for costs of capital between 0 % and 20 %.<br/>
	c. Estimate the cost of capital that corresponds to a NPV of zero (the internal rate of return – [[Interner Zinsfuß\|IRR]]).<br/>		c. Estimate the cost of capital that corresponds to a NPV of zero (the internal rate of return – [[Interner Zinsfuß\|IRR]]).<br/>
	d. A similar project II requires an investment of 600 € and has expected cash flow of 360 € in year 1 and 350 € in year 2. Plot its NPV-function and estimate its IRR.<br/>		d. A similar project II requires an investment of 600 € and has expected cash flow of 360 € in year 1 and 350 € in year 2. Plot its NPV-function and estimate its IRR.<br/>

Wikimeister: /* 4. Nominal and real rates */

2012-01-10T16:59:09Z

4. Nominal and real rates

← Nächstältere Version		Version vom 10. Januar 2012, 18:59 Uhr
Zeile 48:		Zeile 48:
	---<br/>		---<br/>
	References:<br/>		References:<br/>
	~~For some useful formulae you might have a look at our~~ [[Financial Resources Formulary]].<br/>		[[Financial Resources Formulary]]<br/>
	~~For further exercises we suggest our~~ [[Financial Exercises]].<br/>		[[Financial Exercises]]<br/>
			[[Newton-Verfahren]]

Wikimeister am 2. Januar 2012 um 17:28 Uhr

2012-01-02T17:28:15Z

← Nächstältere Version		Version vom 2. Januar 2012, 19:28 Uhr
Zeile 2:		Zeile 2:
	<html><img src=""http://vg06.met.vgwort.de/na/40a695d872e3410c808113bcf92d2735"" width=""1"" height=""1"" alt=""""></html>		<html><img src=""http://vg06.met.vgwort.de/na/40a695d872e3410c808113bcf92d2735"" width=""1"" height=""1"" alt=""""></html>

			<br/>
			=== 1. NPV and NPV-function ===

			Project I requires an investment of 500 € and has expected cash flows of 300 € both in year 1 and 2. <br/>
			a. Calculate the net present value ([[Kapitalwert\|NPV]]) assuming a [[Kalkulationszinssatz\|cost of capital]] of 10 %.<br/>
			b. Plot a graph (NPV-function) showing the investment’s NPV for costs of capital between 0 % and 20 %.<br/>
			c. Estimate the cost of capital that corresponds to a NPV of zero (the internal rate of return – [[Interner Zinsfuß\|IRR]]).<br/>
			d. A similar project II requires an investment of 600 € and has expected cash flow of 360 € in year 1 and 350 € in year 2. Plot its NPV-function and estimate its IRR.<br/>

			=== 2. Calculating IRRs ===
			The following table shows the investments (in year 0) and expected cash flows (years 1 to 3) for the projects A to D:<br/>

	~~sorry~~, this ~~page~~ is ~~still under construction~~		{\|align="center" border="1" cellpadding="3" cellspacing="0"
			\|- align="center"
			\|year \|\| A\|\| B\|\|C\|\|D
			\|- align="center"
			\|0\|\|-500 \|\|-600 \|\|-600\|\|-600
			\|- align="center"
			\|1\|\| 600\|\|400\|\|300\|\|400
			\|- align="center"
			\|2\|\| \|\|350\|\|300\|\|400
			\|- align="center"
			\|3\|\| \|\| \|\|200\|\|-50
			\|}

			a. Calculate the exact internal rates of return of projects A and B.<br/>
			b. Estimate the IRR of projects C and D using the Newton-method or the trial-and-error approach.<br/>
			c. Which one is the best project assuming a cost of capital of 10 %?<br/>
			d. You have to choose between A and B. What is the critical cost of capital for changing from B to A?<br/>

			=== 3. IRR and Effective annual rate ===
			Your bank offers you a special credit over 20.000 €, paid out with a discount (disagio) of 2 %. Interest is 6 % per year, amortization is due after two years. The bank charges annual service fees of 200 € in year 1 and 2.<br/>
			a. Determine the payments associated with that credit.<br/>
			b. Calculate the effective annual rate (internal rate of return).<br/>
			c. The bank offers you a floating rate credit with 12-months-Euribor + 3 % as interest rate. In the first year this results in an interest rate of 5 %. What is the maximum Euribor rate for the second year that results in the same average effective rate than the 6%-fixed-rate-credit of a?<br/>

			=== 4. Nominal and real rates ===
			A project requires an initial investment of 500 €. The expected cash flows of 300 € in year 1 and 316 € in year 2 already reflect an expected inflation rate of 3 % per year.<br/>
			a. Calculate the IRR and the NPV assuming a cost of capital of 10 %.<br/>
			b. Calculate the inflation-adjusted (“real”) cash flows and the real cost of capital.<br/>
			c. Calculate the IRR and the NPV based on the inflation-adjusted figures.<br/>
			d. Adjust the original IRR for the inflation rate and compare it to the IRR of the inflation-adjusted cash flows.

Wikimeister am 2. Januar 2012 um 15:03 Uhr

2012-01-02T15:03:55Z

← Nächstältere Version		Version vom 2. Januar 2012, 17:03 Uhr
Zeile 10:		Zeile 10:
	References:<br/>		References:<br/>
	For some useful formulae you might have a look at our [[Financial Resources Formulary]].<br/>		For some useful formulae you might have a look at our [[Financial Resources Formulary]].<br/>
	For further exercises we suggest ~~<br/>~~		For further exercises we suggest our [[Financial Exercises]].<br/>
	- [[Financial Exercises ~~1: Discounting and compounding]]<br/>~~
	~~- [[Financial Exercises 2: PV and Annuity]]<br/>~~
	~~- [[Financial Exercises 4: Cash flows~~]]<br/>

Wikimeister: Die Seite wurde neu angelegt: „''by Clemens Werkmeister'' sorry, th…“

2012-01-02T14:49:03Z

Die Seite wurde neu angelegt: „''by Clemens Werkmeister'' <html><img src=""http://vg06.met.vgwort.de/na/40a695d872e3410c808113bcf92d2735"" width=""1"" height=""1"" alt=""""></html> sorry, th…“

Neue Seite

''by Clemens Werkmeister''
<html><img src=""http://vg06.met.vgwort.de/na/40a695d872e3410c808113bcf92d2735"" width=""1"" height=""1"" alt=""""></html>

sorry, this page is still under construction

--- 
References: 
For some useful formulae you might have a look at our [[Financial Resources Formulary]]. 
For further exercises we suggest 
- [[Financial Exercises 1: Discounting and compounding]] 
- [[Financial Exercises 2: PV and Annuity]] 
- [[Financial Exercises 4: Cash flows]]