Evaluation methods for projects using Business Data Analytics (BDA) – December 2023 Q22.

The project evaluation techniques tested in the recent Business Data Analytics exam shed light on NPV, payback period, and IRR. Safari Limited’s project details were used to compute these metrics. The payback period is 3.52 years, the NPV is 13365, and the profitability index is 1.3333. The project’s internal rate of return is approximately 17%. 📈📊 #FinancialInsights

# Business Data Analytics (BDA) – Dec 2023 Q22, Project Evaluation Techniques

## Overview 📊
In the recently concluded exam, a question was tested in the core area, specifically in section three, regarding project evaluation techniques. The question involved the testing of NPV, payback period index, and IRR as parameters for measuring the evaluation of a project. The case involved Safari Limited and required the computation of project metrics such as the payback period, net present value, profitability index, and the determination of the project’s internal rate of return.

### Computation of Project Metrics 💰
The question asked for the calculation of the payback period, which is the duration within the project to recover the initial investment. In this case, the annual cash flow for a 5-year project was provided, and the payback period was calculated to be 3.52 years.

#### NPV and Profitability Index Calculation 📈
The net present value and profitability index were calculated based on the provided cash flows and a discounting rate of 12%. The NPV was determined to be 13365, and the profitability index was found to be 1.333.

### Determination of Project IRR 📉
Graphical methods were used to determine the project’s internal rate of return. The process involved plotting the NPV against various discount rates, resulting in the determination of the IRR to be 17%.

## Key Takeaways
– Project evaluation techniques such as NPV, payback period, and IRR play a crucial role in assessing the viability of projects.
– The graphical method can be effectively used to determine the internal rate of return of a project.

## Conclusion
Effectively understanding and applying project evaluation techniques, including computing metrics such as NPV, payback period, and profitability index, is vital for business data analytics. Additionally, leveraging graphical methods for determining project IRR can provide valuable insights into the feasibility of projects.

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