A simple exercise about simple and compound interest.

# Capital budgeting techniques exercises

Basic present value concept; Computation of present value of a single sum to be received in future

Basic present value concept; computation of present value of an annuity.

Computation of present value of cash inflow for two investment proposals with uneven cash flow.

Use of present value index (or profitability index) in ranking investment projects.

Comparison of two investment proposals with unequal useful lives.

Use of payback period method to evaluate an investment proposal with even cash flows.

Computation of payback period of a project with uneven cash flows.

Use of accounting rate of return method in evaluating a cost reduction project.

Use of payback method; replacement of old machine or equipment with salvage value.

Evaluation of a proposal using internal rate of return; a simple exercise.

Computation of accounting rate of return of a proposal with salvage value

Use of accounting rate of return method to evaluate an investment proposal with uneven cash flows.

Use of average investment in an asset to compute accounting rate of return.

Comparison of two alternative projects using net present value method.

Analysis of two alternative investment projects using net present value (NPV) method.

Us of after-tax cash flows in computing net present value (NPV) of a project.

An explanation of how depreciation expenses can help save income tax.

Explanation of how tax deductible expenses can reduce income tax; computation of after-tax cost.

Payback period method vs accounting rate of return method of capital budgeting.