TAILIEUCHUNG - Project Planning Control 4 E Part 2

Tham khảo tài liệu 'project planning control 4 e part 2', kỹ thuật - công nghệ, cơ khí - chế tạo máy phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | Business case It will be noticed from these tables that is the PV factor for a 5 return after 3 years. The PV factor for a 5 return after 2 years is or 1 1 - . X In the above example the income 5 was the same every year. In most projects however the projected annual net cash flow income minus expenditure will vary year by year and to obtain a realistic assessment of the Net Present Value NPV of an investment the net cash flow must be discounted separately for every year of the projected life. The following example will make this clear. Year Income Discount rate Discount factor NPV 1 10 000 5 1 10 000 X 2 11 000 5 1 2 10 000 X 3 12 000 5 1 12000 X 4 12 000 5 1 12000 X 9 Total 45 000 39 One of the main reasons for finding the NPV is to be able to compare the viability of competing projects or different repayment modes. Again an example will demonstrate the point. A company decides to invest 12 000 for a project which is expected to give a total return of 24000 over the 6 years. The discount rate is 8 . There are two options of receiving the yearly income. 1 6000 for years 1 2 12000 4000 for years 2 3 8 000 2000 for years 5 6 4000 2 5000 for years 1 2 3 4 20 000 2000 for years 5 6 4000 Total 24000 24 000 The DCF method will quickly establish which is the most profitable option to take as will be shown in the following table. 9 Project Planning and Control Year Discount factor Cashflow A NPV A Cashflow B NPV B 1 1 6 000 5 5 000 4 2 1 6 000 5 5 000 4 3 1 4000 3 5 000 3 4 1 4000 5 000 3 5 1 2 000 2 000 6 1 2 000 1 2 000 1 Total 24000 19 24 000 19 Clearly A gives the better return and after deducting the original investment of 12000 the net .

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