ZuoTi.Pro
Question

Please submit your work in an Excel file and show all of your calculations. No credit...

Please submit your work in an Excel file and show all of your calculations. No credit will be earned if you just provide a solution with the calculations to justify how you arrived at the solution.

Project A has an initial net investment at time period zero of ($100,000), with $21,000 positive cash flows for the next 7 years. Project A has a cost of capital of 7% APR.

Project B has an initial net investment at time period zero of ($70,000), with the following cash flows:

C01: $11,000

C02: $16,000

C03: $21,000

C04: $26,000

C05: $31,000.

Project B’s cost of capital is 7% APR.

Please provide the NPV, the IRR, the regular payback period, the discounted payback period, and the Modified Internal Rate of Return for project A versus project B.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Answer:

NPV, the IRR, the regular payback period, the discounted payback period, and the Modified Internal Rate of Return for project A versus project B are as follows:

Project A Project B NPV (at APRs 796) IRR Regular payback period Discounted payback period Modified Internal Rate of Return $13,175.08 $13,335.50 10.68%) 12.80% 3.85 4.40 4.76 5.99 8.91% 10.30%)

Project B is better under all criteria.

Calculations are as follows:

Project A Year Initial Investment Operating Cash flows Cash flows Cumulative cash flows PV factor at 796 Discounted cash flows Cumulative discounted cash flows NPV (at APR-7% IRR Regular payback period Discounted payback period Modified Internal Rate of Return 0 4 6 ($100,000 $21,000$21,000 $21,000 $21,000 $21,000 $21,000 $21,000 $100,000) $21,000 $21,000 $21,000$21,000 $21,000 $21,000 $21,000 ($100,000)($79,000) ($58,000) ($37,000) ($16,000)$5,000$26,000 $47,000 0.93458 0.87344 0.816300.762900.71299 0.66634 0.62275 ($100,000)$19,626 $18,342 $17,142 $16,021 $14,973 $13,993 $13,078 ($100,000)($80,374) ($62,032) ($44,889) ($28,869) ($13,896) $97 $13,175 $13,175.08 10.68% 4.76 Years 5.99 Years 8.91% Project B Year Initial Investment Operating Cash flows Cash flows Cumulative cash flows PV factor at 796 Discounted cash flows Cumulative discounted cash flows NPV (at APR-7% 0 4 $70,000 $11,000 $16,000 $11,000 $16,000 $21,000 $26,000 $31,000 $21,000 $26,000 $31,000 $70,000 $)(S) ($43,000) (S22,00)S4,000$35,000 70,000 1 59,000 0.93458 0.87344 0.816300.762900.71299 ($70,000)$10,280 $13,975 $17,142 $19,835 $22,103 2)($8,767)$13,335 $70,000) (559,720) ($45,745) ($28,60 $13.335.50 12.80% Regular payback period Discounted payback perioc Modified Internal Rate of Return 3.85 Years 4.40 Years 10.80%

0 0
Add a comment
Know the answer?
Add Answer to:
Please submit your work in an Excel file and show all of your calculations. No credit...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • please help on the calculations for this problem pictured using excel and show excel calculations and...

    please help on the calculations for this problem pictured using excel and show excel calculations and output used also. thanks in advanced for your help! The payback method helps firms establish and identify a maximum acceptatite payback period that helps in their capital budgeting decisions Consider the case of Cute Camel Woodcraft Company: Cute Camel Woodcraft Company is a small firm, and several of its managers are worried about how soon the firm will be able to recover its initial...

  • Please show all work & calculations. Assume that you are the chief financial officer at Porter...

    Please show all work & calculations. Assume that you are the chief financial officer at Porter Memorial Hospital. The CEO has asked you to analyze two proposed capital investments - Project X and Project Y. Each project requires a net investment outlay of $10,000, and the cost of capital for each project is 12 percent. The project's expected net cash flows are as follows: Year 0 1 Project X ($10,000) $6,500 $3,000 $3,000 $1,000 Project Y ($10,000) $3,000 $3,000 $3,000...

  • SHOW ALL YOUR WORKS FOR YOUR CALCULATIONS: Calculate "Initial investment and Expected annual net cash inflow"...

    SHOW ALL YOUR WORKS FOR YOUR CALCULATIONS: Calculate "Initial investment and Expected annual net cash inflow" Playmore Products is considering producing toy action figures and sandbox toys. The products require different specialized machines each costing $1 million. Each machine has a five-year life and zero residual value. The two products have different patterns of predicted net cash inflows. (Click the icon to view the data.) Calculate the toy action figure project's payback period. If the toy action figure project had...

  • Please do not work in excel and also please show your calculations. FastTrack Bikes, Inc. is...

    Please do not work in excel and also please show your calculations. FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $200,000 per year. Once in production, the bike is expected to make $300,000 (after expenses) per year for 10 years. The cash inflows begin at the end of year 7. At FastTrack, there is a difference of opinion as to the "best" decision rule to use. The...

  • Please show all your work and identify formulas used. P12.1A (LO 1, 2,5), AN U3 Company...

    Please show all your work and identify formulas used. P12.1A (LO 1, 2,5), AN U3 Company is considering three long-term capital investment proposals. Each investment has a useful life of 5 years. Relevant data on each project are as follows. Compute annual rate of return, cash payback, and net present value C Excel Project Bono $160,000 Project Edge $175,000 Project Clayton $200,000 Capital investment Annual net income: Year 1 نا نية 14,000 14,000 14,000 14,000 14,000 $ 70,000 18,000 17,000...

  • please help with these calculations for this finance mindtap problem and show excel computations as well...

    please help with these calculations for this finance mindtap problem and show excel computations as well as the output. the mc answers are: i. a) $11,618,551 b) $11,474,565 c) $13,329,689, d) $11,938,112 ii) a) $2,166,323 b) $1,715,006 c) $1,805,269     d) $1,624,742. iii) a) increase b) stay the same c) decrease Ch 11: Assignment- The Basics of Capital Budgeting Last Tuesday, Green Caterpillar Garden Supplies Inc. lost a portion of its planning and financial data when both its main and its...

  • Please show all work & calculations. The director of capital budgeting for Big Sky Health Systems,...

    Please show all work & calculations. The director of capital budgeting for Big Sky Health Systems, Inc., has estimated the following has estimated the following cash flows in thousands of dollars for a proposed new service: Year 0 1 Expected Net Cash Flow ($100,000) $70,000 $50,000 $20,000 2 3 The project's cost of capital is 10 percent. a. What is the project's payback period? b. What is the project's NPV? c. What is the project's IRR? It's MIRR?

  • This is a cost accounting problem, please show all work. Payback and NPV methods, no income...

    This is a cost accounting problem, please show all work. Payback and NPV methods, no income taxes. (CMA, adapted) Andrews Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $5,000,000 for the year. Lori Bart, staff analyst at Andrews, is preparing an analysis of the three projects under consideration by Corey Andrews, the company's owner. Insert Page Layout Formulas Data Review View Home A В С D...

  • please show all work. no excel. 3. [4 points total] You are production engineer at a...

    please show all work. no excel. 3. [4 points total] You are production engineer at a baking facility that produces glazes and fillings for all major doughnut companies in the US. You are planning to increase production and therefore looking at new equipment that will help increase capacity. You team has come up with three alternative projects that would provide the needed capacity. The options are: Project 1: Pick Heater - To increase the water temperature faster, therefore clean all...

  • answer questions a-c thoroughly with no excel calculations please :) A firm is considering the following...

    answer questions a-c thoroughly with no excel calculations please :) A firm is considering the following projects. Its opportunity cost of capital is 10%, Cash Flows, $ Project Time: 0 -5,800 -1,800 -5,800 +1,200 O +1,200 +1,200 +1,800 +1,200 +3,400 +2,400 +3,400 +3,400 +5,800 a. What is the payback period on each project? Project A 3 years Project B 2 years Project C 3 years What is the discounted payback period on each project? (Round your answers to 2 decimal...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT