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Module 1 - Lecture 8Module 1 - Lecture 8

Spread sheet Spread sheet applications and applications and

training evaluationtraining evaluation Dr. Sayed KasebDr. Sayed Kaseb

Associate Professor, MPED, FECUAssociate Professor, MPED, FECU

Manger of Pathways to Higher Manger of Pathways to Higher EducationEducation

Grant Coordinator of VISION Grant Coordinator of VISION ProjectProject

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A new software will be injected in an existing company, It is

expected that the software will increase annual revenue over

that the current software by m.u.200000 for each of the next 2

years, and by m.u.300000 for each of years 3 and 4. The

planning horizon is only 4 years.

Develop spreadsheet to answer the following questions:

Example 8.1

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(a)Determine the equivalent future value in year 4 of the

increased cash flows, using an 8 % interest rate of return for

both simple and compound interest

(b) Rework part (a) if the flow estimates in year 3 and 4 increase

from m.u.300000 to m.u.600000.

(c) Consider the effects of 4% inflation in the analysis, hence the

rate of return from will be reduced from 8% to 3.85% per year

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a

5

b

6

c

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A person buys a piece of property for m.u.5000 down payment and deferred annual payments of m.u.500 per year for 6 years starting 3 years from now. How much would he pay if he decides to pay the entire price immediately? The interest rate is 8 %.

Example 8.2

Solution:

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6 2

P = 5000 + 500 (P/A, 8, 6) (P/F, 8, 2)

1.08 1 1 = 5000 + 500 ×

0.08 (1.08) 1.08

= m.u. 6981.69

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A principal P is deposited now in a bank with an interest rate of 4.5%. The principal is required to be completely recovered in the form of equal annual withdrawal of m.u.200 per year for the first 5years starting one year after deposit; then a different annual withdrawal of m.u.300/year for the following 3 years. Determine the value of P.

Example 8.3

1 2 3 4

0

P = ??

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i= 4.5 % A = m.u.300

6 7

years

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A = m.u.200

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i 4.50%NPV 1539.77Cash Flow 200

200200200200300300300

Simple SolutionJust use NPV function

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For a nominal interest rate of 15% calculate the effective interest

rate if the interest is compounded:

Biannually, Quarterly, Monthly , and Continuously (m= ∞)

Example 8.4

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A company will make seven consecutive annual investments starting 3 years from now. The first investment is m.u.100000 and the investments decrease at an annual rate of 10 %. What will be the compound amount 14 years from now if the interest rate is 12 %? Determine the single investment that should be made now in order to yield the same amount 14 years ahead. Find the equivalent uniform series of 14 year-end investments which would result in the same amount at the same time. (NB: This example is same as that of example 6.7, however, two spreadsheet solutions will be introduced)

Example 8.5

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Simple SolutionJust use NPV function

E 10% i 12.00%

Years Annual PaymentsCash Flow 0 0

1 0 Payment No.2 100000 13 90000 24 81000 35 72900 46 65610 57 59049 68 53144 7

NPV 283961.46

n 14F -1387752A (P) -42842A (F) 42842

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A spreadsheet solution for example 7.6.

Plan APlan B

Machine 1Machine 2

First cost, m.u.90,00028,000175,000

Annual operating cost, m.u./year

6,0003002,500

Salvage value, m.u.10,0002,00010,000

Life, years81224

Example 8.6

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Determine the annual cash flow analysis for each of

Plan based 8% interest rate for the cash flow shown in

the table below. Plans A, B, and C has a ten-year life

and a scrap value equal to 10% of its original cost. Also

find the capitalized profit for each plan.

Example 8.7

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Table 8.2: Cash flow of Plans A, B and C for example 8.7

Plan APlan BPlan C

Installed cost of equipment m.u.150002500033000

Material and labor saving per year m.u./year

14000900014000

Annual operating expenses m.u./year

800060006000

Scrap Value m.u.150025003300

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Note: The annual cash flow in such case is the annual income

or annual inflow amount , therefore the plan which has the

maximum annual cash flow is the best one, and that is clear in

the spreadsheet solution. The capitalized profit is the present

equivalent amount for the profit gained from each plan through

its life.

Solution

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Input

output

1

4

3

2

Perfo

rman

ce d

ue to

cont

inuo

us im

prov

emen

tImproveEvaluation Form Evaluation Form (EF)(EF)

EvaluatorEvaluatorss

Frequency of Frequency of filling the EFfilling the EF

Course EFCourse EF

Trainee EFTrainee EF

Project EFProject EF

Observer EFObserver EF

Self/Peer Self/Peer Assessment FormAssessment Form

  Duration EFDuration EF  

Seminar EFSeminar EF

TraineesTrainees

TrainerTrainer

ObserverObserver

CoordinatCoordinatoror

SupervisoSupervisorr

Course/Course/ModuleModule

ProjectProject

ProgramProgram

As RequiredAs Required

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Criteria for Criteria for trainees selectiontrainees selection in in

second training week (26/2 – second training week (26/2 – 3/3/2005)3/3/2005)

and certificate deliveryand certificate delivery1 – Attending the full module of first 1 – Attending the full module of first

training weektraining week

2 – Getting high score in Trainee EF2 – Getting high score in Trainee EF

3 – Submitting Trainer EF3 – Submitting Trainer EF

4 – Submitting two reports: 4 – Submitting two reports:

A- Module #1A- Module #1

B- Module #2B- Module #2

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