Visual Aid - 14: SPPWF & USPWF
SPPWF and USPWF:
- Use of SPPWF and USPWF tables
- Discount Factors
- Opportunity cost
- Net present value
Note:- Faculty to explain the use of table with examples on the black board, instead of
using PV formula.
Visual Aid -15: Purchase Decisions
Purchase decision
Equipments Initial Cost
(Rs.)NPV
(Rs.)
A 19,00,000 2,63,791
B 18,00,000 1,01,890
C 17,00,000 1,04,787Note: Faculty to explain with reference to the reading materials for LU 2, why
equipment ‘A’ should be purchased after calculation of NPV.
Visual Aid -16: Internal Rate of Return
Internal Rate of Return;
Example: Initial Cost: Rs.10,000
Year Earning Cost Net Cash Flow
1 3,000 1,00 0 2,000
2 3,500 1,000 2,500
3 4,000 1,000 3,000
4 5,000 2,000 3,000
5 5,000 2,000 3,000*
* Includes Rs.500 as Salvage Value