HBF 417/ BAM 412 ( MANAGERIAL ECONOMICS 1)- ASSIGNMENT 3

1.   Ajimaronu embark on two projects and you are required to calculate the net present value of two projects and suggest which of the two projects should be accepted assuming a discount rate of 11.5%.

	Project A	Project B
Initial Investment	N35,000	N56,00
Estimated Life	5years	5years
Scrap Value	N2,000	N5,000

Cash flows are given as follow:

Year	Cash Inflow
	Project A N	Project B N
1	10,000	40,000
2	15,000	30,000
3	8,000	10,000
4	6,000	5,000
5	4,000	4,000

2.   Ojutonsoro recently convinced her friends and relatives to grant her a loan of

N2,400,000 which she intends to invest in a farming project.

She estimates that the project will yield the following returns annually as

 follow:

          Year                     N`000

          1                               100

          2-5                            300

          6                               400

          7                               700

          8-10                      1,000

Ojutonsoro`s cost of capital is 20%.

As a student of Lagos City Polytechnic, Ikeja, Lagos. You are require to calculate using the following methods of capital budgeting techniques under certainty:

a.     Accounting Rate of Return (ARR)

b.     Payback Period (PBP), assumed the initial investment to be half of the loan granted to Ojutonsoro.

c.      Net Present Value (NPV)

d.     Advice Ojutonsoro based on your results in (a-c) above.

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Course outline:
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Assignment  1 and 2:

https://britstutors.blogspot.com/2018/12/assignment-on-hbf-417-bam-412.html 

 52 Review Questions:

https://britstutors.blogspot.com/2018/11/review-questions-on-managerial.html

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