Autolave Flo Home Insert Draw Page Layout Formulas Workbook (1) Data Review View Search(+1 X Cut Calibr 12 A A = -4 Copy- Pave BU A Format Painter 54 Unde A 1 Assignment 5-2, Question 1 Clipboard Font Wrap Text General Merge & Center $% 92 Alignment Number Sx B C D E F G H Comments Share Normal Autosum Bad Good Conditional Format as Neutral Calculation Formatting-Table- Check Cell insert Delete Format FI Sort & Find & Analyze Clear - Fiber-Select Data 16 Styles Eating Any K L M N P Q R 2 3 a. 4 5 Net Present Value (NPV): 7 NPVX- -$10,000 + S + $ $ 8 9 10 11 12 NPV- S $10,000 S $ ' $ + $ 13 14 15 Internal Rate of Return (IRR): 16 17 To solve for each project's IRR, find the discount rates that equate each NPV to zero: 18 19 20 IRR IRRY % % 21 22 23 Modified Internal Rate of Return (MIRR): 24 25 To obtain each project's MIRR, begin by finding each project's terminal value (TV) of cash inflows: 26 27 TVx 28 29 TVy - $6,500 (1.12)^3 - $ + $ + S + S + $1,000 - $ + $ + $3,500 - $ 30 31 Now, each project's MIRR is the discount rate that equates the PV of the TV to each project's cost, $10,000: 32 33 34 MIRR MIRRY = % % 35 36 37 Profitability Index (PI): 38 39 -10 - 41 -12 - 43 44 - 45 + Cost of X $10,000 - $ PVY NPVy + Cost of Y - $ + $ $ + To obtain each project's Pl, divide its present value of future cash flows by its initial cost. The PV of future cash flows can be found from the NPV calculated earlier: PVX NPVx $ 46 47 48 Plx = PVx 45 Cost of X 49 = $ + $ 50 51 Ply = 52 = PVY $ + Cost of Y $ = 53 54 55 56 57 3-1 Question 1 3-1 Question 2 3-1 Question 3 5.2 Question 1 Ready Arreseilly Investigate 115%