# Advanced capital budgeting problems

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Capital budgeting is the process a business undertakes to evaluate potential major projects or investments. Construction of a new plant or a big investment in an outside venture are examples of ... IPCC_33e_F.M_Capital Budgeting_Assignment Solutions _____21 No.1 for CA/CWA & MEC/CEC MASTER MINDS 3. ADVANCED CAPITAL BUDGETING SOLUTIONS TO ASSIGNMENT PROBLEMS PROBLEM NO.1 Calculation of NPV: X Y Step 1: PV of Initial Cash out flow 10,000 10,000 Step 2: PV of Operating cash inflows Cash flows PV Year X Y PVF @ 10% X Y Solutions to Capital Budgeting Practice Problems 1. The timeline looks like this: R = 5.5% 012 3 (10,000) 2,000 3,000 5,000 Present values (10,000) 1,896 2,695 4,258