Question
29. Go to the Investments & Projections worksheet. Besides using a bank loan to fund their upcoming expansion, W&K Engineering is looking for investors. This
29. Go to the Investments & Projections worksheet. Besides using a bank loan to fund their upcoming expansion, W&K Engineering is looking for investors. This worksheet should show the returns potential investors could realize if they invested a total of $400,000 in the company. Hwan knows that a desirable rate of return would be 9 percent. He also estimates the investment would pay different amounts each year (range B6:B14). Calculate the present value of the investment and the internal rate of return as follows: a. In cell B18, enter a formula that uses the NPV function to calculate the present value of the investment in funding the company's expansion. b. Use the target rate of return value (cell B17) as the rate argument. c. Use the payments in Years 110 (range B5:B14) as the returns paid to investors. (Hint: If a Formula Omits Adjacent Cell error warning appears, ignore it.) d. In cell B20, enter a formula that uses the IRR function to calculate the internal rate of return for the investment. e. Use the payments for Years 110 (range B5:B14) as the returns paid to investors.
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