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Can you please use a financial calculator instead of Excel to solve this? Thank you. Instructions: You are required to use a financial calculator or
Can you please use a financial calculator instead of Excel to solve this? Thank you.
Instructions: You are required to use a financial calculator or spreadsheet (Excel) to solve the following capital budgeting problem (sample questions and solutions are provided for guidance): Mandilly Industries is undertaking a series of significant cost saving changes to its operations effective immediately. It will cost the company $2,400,000 to implement the changes today. Over the next eight years, this will result in savings of $200,000 in each of the first two years, $500,000 in each of the three years following that, and $800,000 in each of the final three years. (i) (ii) (iii) Develop the timeline (linear representation of the timing of cash flows). Calculate the Payback Period (PB). Calculate the Internal Rate of Return (IRR). Calculate the Net Present Value (NPV) at the following required rates of return: (a) 8% (b) 10% (c) 12% (d) 14% Calculate the Profitability Index (PT) at the following required rates of return: (iv) (v) (vi) (a) 8% (b) 10% (c) 12% (d) 14% Using IRR and NPV criterion, comment if the project should be accepted or rejected at the following required rates of return: (a) 8% (b) 10% (c) 12% (d) 14% (vii) Plot the Net Present Value profile (NPV on Y axis and rates of return on X-axis) Step by Step Solution
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