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Assume you are conducting a capital budgeting analysis. The proposed project has an expected cash OUTFLOW at time zero of $4,250 The project cash Inflows
Assume you are conducting a capital budgeting analysis. The proposed project has an expected cash OUTFLOW at time zero of $4,250 The project cash Inflows are listed in column B. Assume a discount rate (WACC) of 4.82%. Input Area (enter the values from the question description) Cash OUTflow at time zero Discount Rate (WACC) (1) Enter the cash OUTflow in cell B15 (2) Use either the PV formula or PV function in column C to calculate the present value of EACH cash flow in Column B (3) Use either the FV formula or FV function in column E to calculate the future value of EACH cash flow in Column B Year Cash Flow PV of Cash Flow FV of Cash Flow 0 1 2 3 4 5 800 1,050 1,650 1,300 1,2701 (4) Calculate the Net Present Value of this project by summing the present values from column C (5) Calculate the Net Present Value of this project using the NPV function (6) Explain why these two calculation approaches produce the same result: (7) Calculate the future value of this project by summing the future values from column E (8) Calculate the future value (FV formula or function) of this project by compounding the project's NPV to the end of the investment horizon (treating the NPV as a lump sum) (9) Calculate this project's Internal Rate of Return (10) Now assume the project analysis provides dates for making/receiving cash flows (instead of periods as above) Using the discount rate and cash OUTflow at time zero, calculate the project's Net Present Value and Internal Rate of Return Cash Flow **Hint: notice actual dates are given Date 10/18/2020 10/13/2021 9/15/2022 10/13/2023 7/18/2024 10/13/2025 NPV IRR 800 1,050 1,650 1,300 1,270 (11) Based on this analysis, we you recommend accepting this project? Provide a 'Yes' or 'No' response AND justify your position with at least 2 numeric analysis results
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