Bikes "R" Us is considering two capital investment proposals to add a new line of bikes to its current lineup. The investments would be in a new machine to produce the new line of bikes.

Estimates regarding each project are provided below:

	X-Treme Mountain Bike	Hybrid Mountain Bike
Initial Investment	$750,000	$1,200,000
Annual Net Income	$70,000	$88,000
Net annual cash inflow	$192,802	$291,899
Estimated Useful Life (years)	5	6
Salvage Value	0	0

Both projects are mutually exclusive; i.e., Bikes "R" Us can only afford to select one of the projects and not both.

The company requires a 10% rate of return on all new investments.

Present Value of an Annuity of 1

Periods	9%	10%	11%	12%
5	3.890	3.791	3.696	3.605
6	4.486	4.355	4.231	4.111

Answer the questions below:

(a) Compute the Cash Payback Period for both projects (8 points)

Be sure to calculate the Cost of Capital Investment and Net Annual Cash Flow for each project as well.

NOTE: In order to receive full credit, you must use Excel formulas in each cell with a '?'.

(b) Compute the Net Present Value for both projects (13 points)

Be sure to calculate the Present Value of Net Cash Flows and Cost of Capital Investment for each project and state whether to accept or reject the proposal based on theNet Present Value calculated.

NOTE: In order to receive full credit, you must use Excel formulas in each cell with a '?'.

(c) Compute the Profitability Index for both projects. (10 points)

Be sure to calculate the Present Value of Net Cash Flows and Cost of Capital Investment for each project.

NOTE: In order to receive full credit, you must use Excel formulas in each cell with a '?'.

(d) Compute the Internal Rate of Return for both projects. (14 points)

Be sure to calculate the Cost of Capital Investment, Net Annual Cash Flow, and Internal Rate of Return Factor for each project. Also, state whether to accept or rejectthe proposal based on the Internal Rate of Return calculated.

NOTE: In order to receive full credit, you must use Excel formulas in each cell with a '?'.

(e) Compute the Annual Rate of Return for both projects. (10 points)

Be sure to calculate the Expected Annual Net Income and Average Investment for each project.

NOTE: In order to receive full credit, you must use Excel formulas in each cell with a '?'.

Points Possible: 55.00

Question:	Points:
PART (a)	8
PART (b)	13
PART (c)	10
PART (d)	14
PART (e)	10
Total Points	55

Project #9: Capital Investments (55 Points) Answer the questions below. NOTE: In order to receive full credit, you must use Excel formulas in each cell with a '?'. (a) Compute the Cash Payback Period for both projects (8 points) Be sure to calculate the Cost of Capital Investment and Net Annual Cash Flow for each project as well. NOTE: In order to receive full credit, you must use Excel formulas in each cell with a '?'. (b) Compute the Net Present Value for both projects (13 points) Be sure to calculate the Present Value of Net Cash Flows and Cost of Capital Investment for each project and state whether to accept or reject the proposal based on the Net Present Value calculated. NOTE: In order to receive full credit, you must use Excel formulas in each cell with a '?'. (c) Compute the Profitability Index for both projects. (10 points) : Be sure to calculate the Present Value of Net Cash Flows and Cost of Capital Investment for each project. NOTE: In order to receive full credit, you must use Excel formulas in each cell with a '?'. (d) Compute the Internal Rate of Return for both projects. (14 points) : Be sure to calculate the Cost of Capital Investment, Net Annual Cash Flow, and Internal Rate of Return Factor for each project. Also, state whether to accept or reject the proposal based on the Internal Rate of Return calculated NOTE: In order to receive full credit, you must use Excel formulas in each cell with a '?'. (e) Compute the Annual Rate of Return for both projects. (10 points) : Be sure to calculate the Expected Annual Net Income and Average Investment for each project. NOTE: In order to receive full credit, you must use Excel formulas in each cell with a '?'. Answer parts (a), (b), (c), (d), and (e) in the cells below. #UPLOAD YOUR COMPLETED SPREADSHEET TO CANVAS TO SUBMIT YOUR ASSIGNMENT *IF YOU ARE USING A DIFFERENT SPREADSHEET SOFTWARE OTHER THAN MICROSOFT EXCEL, CONVERT THE FILE TO A MICROSOFT EXCEL FORMAT BEFORE UPLOADING OR YOU WILL RECEIVE A ZERO FOR THIS PROJECT.(a) Compute the Cash Payback Period for both projects (8 Points) X-Treme Mountain Bike Hybrid Mountain Bike Cost of Capital Investment Value Value REMEMBER: You must use formulas in the cells Net Annual Cash Flow Value Value with a '?' or you will Cash Payback Period ? ? (Round to 3 decimals) receive ZERO points. (b) Compute the Net Present Value for both projects (13 Points) X-Treme Mountain Bike Hybrid Mountain Bike Present Value of Net Cash Flows ? ? (Round to 0 decimals) REMEMBER: You must Cost of Capital Investment Value Value use formulas in the cells Net Present Value 2 ( Round to 0 decimals) with a '?' or you will Accept or Reject Proposal (Select an answer) receive ZERO points. (c) Compute the Profitability Index for both projects (10 Points) X-Treme Mountain Bike Hybrid Mountain Bike Present Value of Net Cash Flows ? ? 'Round to 0 decimals) REMEMBER: You must use formulas in the cells Cost of Capital Investment Value Value with a '?' or you will Profitability Index ? ? (Round to 3 decimals) receive ZERO points. (d) Compute the Internal Rate of Return for both projects. (14 Points) X-Treme Mountain Bike Hybrid Mountain Bike Cost of Capital Investment Value Value REMEMBER: You must Value Value use formulas in the cells Net Annual Cash Flow with a '?' or you will Internal Rate of Return Factor ( Round to 3 decimals) receive ZERO points. Internal Rate of Return Value Value Accept or Reject Proposal (Select an answer)(e) Compute the Annual Rate of Return for both projects. (10 Points) X-Treme Mountain Bike Hybrid Mountain Bike Expected Annual Net Income Value Value REMEMBER: You must use formulas in the cells Average Investment ? ? ( Round to 0 decimals) with a '?' or you will Annual Rate of Return (Round to 0 decimals) receive ZERO points