0.01 70 0 1 PART 1 B-CAPITAL BUDGETING 2 3 14 5 6 7 The same firm as in Part 1 is considering the investment of two independent projects, X and Y, which are described below. Please do not assume anything. Use a WACC of 15% to evaluate the projects. Cost of Capital>> PROJECT X PROJECT Y A. Calculate Payback period for both projects Year Cash Inflows B. Calculate NPV for both projects Initial Investment ($11,050,000) ($11,250,000) 0 C. Calculate IRR for both projects 1 $3,500,000 $5,500,000 1 D. Calculate MIRR for both projects 2 $3,500,000 $5,800,000 2 E. Which project should the firm accept? Why? 3 $5,800,000 $2,900,000 3 4 $5,800,000 $1,950,000 4 For the Payback Period Calculation Cash End of Year Balances PROJECT X PROJECT Y $0 8 Year 1 -9 60 1 2 3 2 4 3 14 55 66 1B-A 1B-B 1B-C 1B-D Please enter your formulas in the blue cells: A. Payback B. NPV C. IRR D. MIRR E. Accept projects>>> 17 18 1B-E Yes or No Yes or No Why?: 19 O *1 2 3 4 End of Part 1 Valuing New Bonds Valuing Stock Part 1 - WACC Part 2 - CAPM Sheet1 +