Question

1. For the calculations of a, b, c, d, e, f, g, h from the data below, show all your works, and then choose which project or franchises of L and S is better? For d. and h. specially, refer to the chapter 10 posted. (Data) Cash Flows for Franchises L and S. (Discount rate r or WACC is 10%) L's CFS S's CFs 1 year -105 -105 2 year 10 70 3 year 60 5 0 4 year 80 20 a. NPV and NPV IRR and IRR L d. MIRRL and MIRRS Crossover rate or Crossover point PIL and PIS Payback and Payback f. Discounted Paybackl, and Discounted Paybacks h. EAAL and EAAS

Answer 1

B8 X ✓ fi =IRR(B3:36) F G J K H I Simple cumulative cash flows Cash flows Difference PVIF @10% Present value Cumulative PV cash flows A В A-B Ахс | Year 0 $ 1 $ - 2 $ 3 $ (105) $ 10 $ 60 $ 80 $ (105) $ 70S 50 $ 20 $ (60) 10 60 1.000 $ 0.909 $ 0.826 $ 0.751 $ (105.00) $ 9.09 $ 49.59 $ 60.11 $ (105.00) $ 63.64 $ 41.32 $ 15.03 $ (105) $ (95) $ (35) $ 45 $ (105) $ (35) $ 15 $ 35 $ (105.00) $ (95.91) $ (46.32) $ 13.78 $ (105.00) (41.36) (0.04) 14.98 6 -NM +0F IRR 15.75% 19.73% $ $ 8.68% NPV (Crossover rate) :PVIFA(10%,4) 13.78 2.487 14.98 2.487 11 MIRR EAA $ 5.54 $ 6.03 14.62% | =MIRR(B3:36,10%,10%) 15.00% =MIRR(C3:C6,10%,10%) Profitability index 1.131 =1+13.78/105 1.143 =1+14.98/105 Payback period 2.44 Years =2+35/80 1.70 Years =1+35/50 Discounted Payback period 2.77 2.00 Years Years =2+46.32/60.11 =2+0.04/15.03

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