Assignment Requirements:

Use the Excel workbook provided to compute the NPV and IRR of the two initial plans. Format your work using the exhibit on page 1487 of your text as an example. Complete your work for the initial data on the Initial NPV IRR tab of the Excel workbook provided.

Recalculate the NPV and IRR of the two plans assuming that the initial cost of the plans will be $5,500,000. Complete your work for these revised numbers on the Revised NPV IRR tab of the Excel workbook provided.

Answer the following questions in a Word document:

Referring to your calculations for the initial project costs, which plan, if any, should the company adopt and why? What qualitative factors other than financial analyses

may the company consider in making their decision?Please state at least 3 specific items.

Explain the relationship between NPV and IRR. Discuss the application of this relationship to the results you obtained for your calculations of the initial plans.

Considering the results of the analysis with the lower cost (requirement 2):

If the company has the resources to pursue both plans, what would you recommend?

If the company may only pursue one plan, what would you recommend?

Submit your Excel and Word documents in your Blackboard/eLearn course assignment area.

Specific Instructions:

Download the Excel workbook provided for this assignment. Save the Excel document and create your Word document with your first initial and last name. Example: ILastname_BA213NPVIRR.

Construct your NPV IRR tables using the example format in your text. You must use the formulas in Excel for your calculations. Do not refer to or use the factors provided in the table in your text.

Proper text formatting includes attention to bolding, capitalization, cell alignment, and borders.

Proper number formatting includes attention to dollar signs, percentage signs, decimal places, borders, and alignment.

Use Excel formulas to calculate NPV, IRR, and summations. Page 1488 of your text gives examples of these formulas. You should consider using the Formulas tab in Excel to help you construct these formulas.

Your written response contained in your Word document should follow college writing requirements and should contain complete sentences. Please pay attention to formatting, paragraphing, grammar, and spelling. Remember the spell check in Word will indicate correct spelling but not correct word choice.

Submit your Excel and Word documents in the assignment submission area of your course eLearn/Blackboard website. Note that you may upload both documents in one submission.

Grading Criteria:

A total of 50 points are available for this assignment as follows:

15 points for each of requirements 1, 2, and 3, for a total of 45 points.

5 points for proper file naming and file submission.

The 15 points for each of requirements 1 and 2, the Excel analysis, are available as follows:

5 points for correctness of calculations

5 points for use of Excel formulas to calculate NPV, IRR, and summations

5 points for formatting Excel work per the example provided

The 15 points for requirement 3, the written response, are available as follows:

10 points for correct analysis and response to questions

5 points for correctness of writing and formatting as described in item 7 above

N15 BA213 NPV IRR Assignment Data Sheet Proiect Name BA211 BA212 s 6,000, 000 6,000, 000 8 Initial Cos't 9 Yearly Cash Inflows: 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 700, 000 2, 000, 000 1, 700, 000 1, 400, 000 1, 000, 000 700, 000 400, 000 100, 000 3, 600, 000 12 13 15 16 18 10 20 21 Required Rate of 22 Return 23 20% 20% 25 26 tal Investment Decislons One method of setting up Excel spreadsheets is to have areas of the spreadsheet designated for inputs and outputs. Cells for entering the inputs are at the top of the spread- sheet. Cells with formulas to calculate the outputs are calculated by Excel based on the formulas entered, which reference the cells with the inputs. This method of setup allows the user to make changes to any input cell and have Excel automatically recalculate the outputs. Exhibit 26-13 shows the Excel spread- sheet set up in this manner with Smart Touch Learning's capital investment analysis for the two projects. outputs are in a section below the inputs. All Exhibit 26-13 Capital Investment Analysis Using Excel Home Insert Page Layout Formulas Dsta Review View POF Acrobat3 File 1 Smart Touch Learning Capital Investment Analysis 2 4 Project 6 7 8 INPUTS: Useful Life (in years) Discount rate 10 Initial Investment (1,000,000 11 Cash Inflows: 12 Year 1 13 Year2 14 Year 3 15 Year4 16 Year 5 17 Totals 18 19 OUTPUTS: 20 NPV 21 IRR (1,000,000) 00,000 40,000 $1,440,000 1,527,250 $48,635 16.01% $79,196 18.23% H: Results. Formulas 100% | Notice that the initial investment is entered as a negative amount because it is a cash outflow and the cash inflows are entered as positive amounts. In the output sec- tion, Excel calculated the NPV for both projects at a slightly different amount than the amounts calculated using the PV tables. The difference between the Excel calculation and he PV tables is because the PV factors in the tables are rounded to the calculation using t N15 BA213 NPV IRR Assignment Data Sheet Proiect Name BA211 BA212 s 6,000, 000 6,000, 000 8 Initial Cos't 9 Yearly Cash Inflows: 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 400, 000 1, 700, 000 2, 000, 000 1, 700, 000 1, 400, 000 1, 000, 000 700, 000 400, 000 100, 000 3, 600, 000 12 13 15 16 18 10 20 21 Required Rate of 22 Return 23 20% 20% 25 26 tal Investment Decislons One method of setting up Excel spreadsheets is to have areas of the spreadsheet designated for inputs and outputs. Cells for entering the inputs are at the top of the spread- sheet. Cells with formulas to calculate the outputs are calculated by Excel based on the formulas entered, which reference the cells with the inputs. This method of setup allows the user to make changes to any input cell and have Excel automatically recalculate the outputs. Exhibit 26-13 shows the Excel spread- sheet set up in this manner with Smart Touch Learning's capital investment analysis for the two projects. outputs are in a section below the inputs. All Exhibit 26-13 Capital Investment Analysis Using Excel Home Insert Page Layout Formulas Dsta Review View POF Acrobat3 File 1 Smart Touch Learning Capital Investment Analysis 2 4 Project 6 7 8 INPUTS: Useful Life (in years) Discount rate 10 Initial Investment (1,000,000 11 Cash Inflows: 12 Year 1 13 Year2 14 Year 3 15 Year4 16 Year 5 17 Totals 18 19 OUTPUTS: 20 NPV 21 IRR (1,000,000) 00,000 40,000 $1,440,000 1,527,250 $48,635 16.01% $79,196 18.23% H: Results. Formulas 100% | Notice that the initial investment is entered as a negative amount because it is a cash outflow and the cash inflows are entered as positive amounts. In the output sec- tion, Excel calculated the NPV for both projects at a slightly different amount than the amounts calculated using the PV tables. The difference between the Excel calculation and he PV tables is because the PV factors in the tables are rounded to the calculation using t