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BUS-FPX3062 Assessment 5 Spreadsheet PDF

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BUS-FPX3062 Assessment 5 Template Capital Budgeting Solve the following problems. Create appropriate formulas using the supplied values in the corresponding cells so Excel can calculate the answer. Example problems can be found on the "Capital Budgeting Example" tab below. 1. Compute the NPV statistic for Project Y. Explain whether or not the firm should accept or reject the project with the cash flows shown in the chart below if the appropriate cost of capital is 10%. Year 0 1 2 3 4 Cash Flow -$8,000 $3,350 $4,180 $1,520 $300 NPV= -$139.18 With negative NPV, they should reject the project. 2. Compute the payback period statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown in the chart if the maximum allowable payback is four years. Year 0 1 2 3 4 5 Cash Flow -$1,450 $250 $380 $620 $1,000 $100 Payback period = 3.2 3. Two projects being considered are mutually exclusive and have the following projected cash flows: (Compute both NPV and IRR). The cost of capital is 10%. Year 0 1 2 3 4 5 Cash Flow A -$50,000 $15,625 $15,625 $15,625 $15,625 $15,625 NPV = $8,391.86 16.99% IRR = 4. Los Angeles Lumber Company is considering a project with a cost of $1,000 initially, and inflows of $300 at the end of years 1-5. LALC’s cost of capital is 12 percent. What is the project’s IRR and NPV? 15% 5. A project has a cost of $65,000 and it's expected cash inflows are $12,000 per year for 9 years and the cost of ca ...
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