# MGT411 Money & Banking Assignment 1 Solution Fall 2014

Assignment
Dear Students!
The concept of Time value of money is very important in Finance. Every Transactional Event in Business/ Project results in the future cash inflows or outflows. Whenever there are several years/ time periods and manager has to make decision, he always takes into account the concept of Present value. The application of present value is very important to understand.
Download a file: “Feasibility Study- Steel Products Welding.pdf” in the “Downloads” section in your VULMS account. After extracting the data, solve the assignment according to the given questions:
a. Calculate the Present Value of 10 years’ future cash inflows (by using: net profit after tax figure and 40% Discount rate). (4 marks)
b. By comparing Total Project Cost: Rs. 673,258 with the answer of “part a”, comment weather the project is profitable or not? (1 mark)
c.Calculate the IRR of the project, by using the same cash inflows of Part a. (Hint: Calculation of IRR has been discussed on the MDB board: Lecture 11. IRR) (5 marks) (Show complete working of all the calculations)

Solution: