Question

please don't use handwriting .. use your own words i need unique answer ..

please don't copy and paste

Q1.Dala Corporation is considering a project, which will involve the following cash inflows and (out) flows

Details	Amount
Initial Outlay	SAR (400000)
After 1 Year	SAR 40000
After 2 Years	SAR 300000
After 3Years	SAR 300000

What will be the NPV of this project if a discount rate of 15% is used?

_________________

Q2.Merck Inc. is about to undertake a project and has computed the NPV of the project using a variety of discount rates

Discount Rate Used	NPV
10%	SAR 1,30,000
15%	SAR 50,000
20%	SAR -50,000

What is the approximate IRR of this project?

_____________________

Q3. Which are the parties involved in Bond Issuance?

Answer 1

1. Computation of Dala corporation Project NPV

Net Present value (NPV) is the Present value of cash inflow minus Present value of the cash outflow. it can be calculated with following equation -

Discount rate = 15%

Thus, Project NPV would be SAR 58,880.58 (rounded to two decimals)

2. Computation of IRR

Internal Rate of Return (IRR) is the rate at which present value of cash inflows equal to present value of cash out flows which means NPV would be Zero at IRR.

Following information provided

Discount rate	NPV
10%	SAR 130,000
15%	SAR 50,000
20%	SAR - 50,000

with above information, we can say that IRR lies between 15 % to 20 % because NPV would be zero between these two rates.

with following formula we can calculate the approx IRR

Thus, Approx IRR of the Project would be 17.5%

3. Parties involved in Bond Issuance

Bond is the fixed income financial instrument, which is generally issued by Government, Banks & Corporate houses. It's issuer use it to pool the money from market and it also attractive to investor as it has fixed income and NiL to very less level risk.

There are various participant involved in Bond Issuance, some major participant discussed below -

1. Issuer - The is the person such government/Banks etc. who issue Bonds to public. The primary motive of issuer to pool the money from market at lowest possible interest rate.

2. Investment Banker - They provide financial advisory services to the issuer at the time Issuance of the Bond.

3. Underwriter - In simple words, they buy the Bond from issuer to sell it to the public at the of issuance of bond.

4. Paying Agent - It is commercial bank in which issuer deposit money for coupon payment and this bank act as paying agent and the coupon amount to bondholders.

5. Bondholders - They buy and own the Bonds.