Question

vested in a UJITWS are in- eted in an account wild pays 10 percent annually w today (time o), in lieu of the $2,000 cash flow, would be needed late $20,000 at the end of year 5? (Assume that the cash flows for What cash flow today (time to accumulate $20.000 years 1 through 5 remain the same.) 9.4 Better Health Inc. is eval up-front (time o) expendi Ith Inc. is evaluating two capital investments, each of which requires an (time o) expenditure of $1.5 million. The projects are expected to produce the following net cash inflows: Year W NH Project A ($) 500,000 1,000,000 2,000,000 Project B (S) 2,000,000 1,000,000 600,000 a. What is each project's IRR? what is each project's NPV if the opportunity cost of capital is 10 percent? 5 percent? 15 percent? 9.5 Capital Healthplans Inc. is eva plans Inc. is evaluating two different methods for providing home ealth services to its members. Both methods invou to its members. Both methods involve contracting out for services, hed by the method chosen.

Answer 1

в 9.4) We will use the excel formula for calculating the IRR and NPV Year Project A (1,500,000) 500,000 1,000,000 2,000,000 Project B (1,500,000) 2,000,000 1,000,000 600,000 IRR IRR(D6:09) IRR(E6:E9) 43.97% 82.03% b) NPV @ 10% NPV(10%,D7:09) +D6 1,283,621.34 NPV(10%,E7:E9) +E6 1,595,416.98 NPV @ 5% NPV(5%,D7:09)+D6 1,610,895.15 NPV(5%,E7:E9)+E6 1,830,093.94 NPV @ 15% NPV(15%,D7:09)+D6 1,005,958.74 NPV(15%,E7:E9) +E6 1,389,783.84