Question

please round the numbers to 2 decimal places

Problem 8-21 NPV and Payback Period (LO 1, 4] Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used a three-year cutoff for projects. The required return is 10 percent Year Project F Project G O-NM $140,000 57,500 52,500 62,500 57,500 52,500 $210,000 37,500 52,500 92,500 122,500 137,500 a. Calculate the payback period for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate the NPV for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. Which project, if any, should the company accept? years years Project F Project G Project F Project G

Answer 1

f SUM(1526:1531) 532 C D E F G H Project f Cumulative Cash Cashflows(B) Cumulative Cashflow Project g 12 a) Cashflows 13 Year (140,000.00) $ (140,000.00) $(210,000.00) $ 57,500.00 $ 52,500.00 $ 62,500.00 $ 57,500.00 $ 52,500.00 $ (210,000.00) 14 (82,500.00) 37,500.00 $ (30,000.00) $52,500.00 $ 32,500.00 $ 92,500.00 $ 90,000.00 $122,500.00 $ 142,500.00 137,500.00 $ (172,500.00) 15 1 (120,000.00) (27,500.00) 16 2 $ 17 18 4 95,000.00 19 5 232,500.00 20 2+30000/62500 3+27500/122500 21 Payback Period 2.48 Years 22 3.22 Years 23 b) Calculation of NPV Project F Pvcf(A) $ Project F Project G Cashflows(B) Project G Pvcf(A) 24 Cashflows Pv@10% 25 Year $ (140,000.00)$ (210,000.00) 57,500.00 $ 52,500.00 $ 62,500.00 $ $ (140,000.00) $ 52,272.73 $ (210,000.00) 26 1 $ 0.826446281 $ 27 1 37,500.00 0.909090909 34,090.91 43,388.43 $ 28 2 52,500.00 43,388.43 $ 46,957.18 $ 0.751314801 29 92,500.00 69,496.62 83,669.15 57,500.00 $ 52,500.00 $ $ 0.620921323 $ 30 4 122,500.00 0.683013455 39,273.27 32,598.37 $ 74,489.98 $ 137,500.00 31 5 85,376.68 32 NPV 106,021.79 33 34 c) Based NPV Project G selected ,since it has higher NPV

Function Library Defined Names Formula Auditing Calculation feSUM(1526:1531) 1532 C D E F G Project g Cumulative Cashflow - G514 Project f Cumulative Cashflow Cashflows(B) Cashflows Year 0 =E514 -210000 -140000 57500 - F514 + E515 - H514 +G515 37500 2 52500 =F515 + E516 52500 - H515+G516 = F516+E517 62500 57500 92500 -H516+G517 4 = F517+E518 =H517+G518 122500 -F518+ E519 -H518+G519 52500 137500 Payback Period 2+30000/62500 3+27500/122500 2+30000/62500 -3+27500/ 122500 Years Years Calculation of NPV Project F Project G Project G Pvcf(A) Project F Pvcf(A) Cashflows Cashflows(B) Pv@10% Year 0 - E526*G526 - E527*G527 -140000 1 |- G526 /1.1 -G527 / 1.1 |-G528 /1.1 |-G529 / 1.1 -G530/1.1 |- F526 * G526 -210000 57500 37500 -F527 * G527 -F528*G528 2 52500 - E528*G528 52500 - E529* G529 62500 92500 -F529 * G529 57500 -F530*G530 4 -E530* G530 - E531 *G531 122500 137500 52500 5 F531*G531 SUM(1526:1531) -SUM(H526:H531) NPV Based NPV Projec