Assume that Disney has two park expansion opportunities, one at Disneyland in California and the other at Walt Disney World in Florida. The leadership wants to narrow them to one choice. One at Disneyland will require a much larger initial investment but provides cash flows (if successful) over a longer period of time. In addition, the longer project life at Disneyland requires additional expenditures in year 3 of the project to enhance construction throughout the projects 10-year expected life. The plan at Walt Disney World is much simpler. It spans four years, with no extra expenditures.

In this part of the project, write a short report explaining which project you would pick. Include the following:

1. Payback periods for each project.
2. Based on the calculated payback periods, which project appears to be the better option? What are the limitations of the payback period?
3. Assume Disney uses a 20% discount rate to evaluate the present values of the two proposals. What are the NPVs of the two projects?
4. Based on your NPV calculations, which project would you recommend to proceed with? Explain.

Your submission should be at least one page of written analysis in Microsoft Word (APA formatted and with correct grammar) and an Excel spreadsheet for the data and calculations.

To be completed in Excel:

Module 04 Project NOTE: You may need to add more columns to finish the problems. Disneyland Assumptions Required rate of return: ? Net cash outflow schedule Year cash outflow Cumulative Cash Flows 0 $ (5,000,000) 1 2,000,000 2 2,000,000 3 (1,000,000) 4 2,000,000 5 1,500,000 6 1,500,000 7 1,500,000 8 800,000 9 500,000 10 100,000 Walt Disney World Assumptions Required rate of return: ? Net cash outflow schedule Year cash outflow Cumulative Cash Flows 0 $ (1,500,000) 1 800,000 2 800,000 3 400,000 4 100,000 Disneyland 1) Solution Payback period Walt Disney World Solution Payback period Disneyland 3) Solution NPV Walt Disney World Solution NPV