00:01
We have to determine the investment choice using the discounted payback criterion.
00:06
So, firstly for project x year 0 we have is 10 ,000 year 1 we have is 4000 which is divided by 1 to which we add 0 .11.
00:30
So, the value over here is 3 ,603 .60.
00:37
For year 2 we have the value as 8 ,000 which is divided by 1 to which we add 0 .11 in brackets to the power 2.
00:50
So, the value is obtained as 6 ,257 .85.
00:57
For year 3 we have the value 6 ,000 which is divided by 1 to which we add 0 .11 is written in brackets to the power 3.
01:09
So, the value then is 4 ,084 .69.
01:14
Now, cumulative discounted cash flows for project x is evaluated as year 0 we have is 10 ,000 then year 1 we have is 10 ,000 to which we add 3 ,603 .60.
01:58
So, the value then is minus 6 ,396 .40.
02:06
Then we have here the negative value for year 2 we have is minus 6 ,396 .40 to which we add 6 ,257 .85 we get the value as minus 139 .55.
02:32
Further for year 3 we have the value as and year 0 also we have 10 ,000 here also we have the negative value.
02:45
So, for year 3 we have minus 139 .55 to which we add 4 ,084 .69.
02:55
So, the value then is 3 ,945 .14.
03:02
For project y we have the values as year 0 is minus 20 ,000 year 1 we have is 4 ,000 which is divided by 1 to which we add 0 .11 the value then is 3 ,603 .60.
03:34
Year 2 we have is 12 ,000 which is divided by bracket 1 to which we add 0 .11 bracket close to the power 2 the value then is 8 ,830 .57.
03:50
Further year 3 we have is 16 ,000 which is divided by bracket 1 to which we add 0 .11 bracket close to the power 3...
