FINANCIAL ANALYSIS

Financial Analysis



Financial Analysis

Introduction

Ardnylos Corporation is looking at six projects with the following cash flows. The cost of capital is 12%.

Time

0

1

2

3

4

5

6

7

8

Project A

-15

2

3

4

9

6

4

2

1

Project B

-8

-3

5

5

5

4

4

2

1

Project C

-45

25

20

15

5

5

5

3

1

Project D

-1

2

2

2

0

0

0

0

0

Project E

-30

6

6

6

6

6

0

0

0

Project F

-10

-20

5

10

14

13

12

8

-5

Now, to evaluate the feasibility of the 6 projects, we need to calculate NPV and IRR for the aforementioned projects. But before that, we will look at the concepts of NPV and IRR.

NPV

Net present value - a balance of all operating and investment cash flows, taking into account the additional cost of used capital. This is a classic method of valuation of investments in fixed assets, providing ...