CAPITAL BUDGETING CALCULATIONS AND ANALYSIS Be sure to read the CAPITAL BUDGETING INSTRUCTIONS carefully before starting your calculations on this worksheet. CASH FLOWS OVER PROJECT #1's LIFE Target Rate of Return = WACC = 12.255% Auto Transferred from your WACC worksheet Net Cash Flows each year Year Number 0 1 2 3 4 YEAR 2020 2021 2022 2023 2024 CAPITAL PRODUCT #1 -$5,885,800 $1,476,800 $1,365,100 $1,393,000 $3,281,400 "Cumulative cash flows (See Problem 5-1)" -$5,885,800 -$7,362,600 -$8,727,700 -$10,120,700 -$13,402,100 "Discounted cash flows (See Problems 5-3 (Part a) & 5-4 (Part b))" -$5,885,800 $0 $0 $0 "Cumulative discounted cash flows (See Problems 5-3 (Part a) & 5-4 (Part b))" -$5,885,800 $0 $0 $0 $0 CAPITAL BUDGETING CALCULATIONS PRODUCT #1 CALCULATE "ANALYSIS: ACCEPTABLE or UNACCEPTABLE?" "Net Present Value (NPV) (See Problems 5-11 (Part c) & 5-12 (Part b))" $0 "Internal Rate of Return (IRR) (See Problems 5-5 & 5-6)" 0.00% "Profitability Index (PI) (See Problem 5-8)" 0.000 "Modified Internal Rate of Return (MIRR) (using the COMBINATION APPROACH) (See Problem 5-20)" 0.00% Reinvestment rate and Finance Rate for MIRR should both be equal to the Target Rate of Return. "Payback Period (PP) (See Problem 5-1)" 0.00 "Discounted Payback Period (DPP) (See Problems 5-3 (Part a) & 5-4 (Part b))" 0.00 CASH FLOWS OVER PROJECT #2's LIFE Target Rate of Return = WACC = 12.255% Auto Transferred from your WACC worksheet Net Cash Flows each year Year Number 0 1 2 3 4 YEAR 2020 2021 2022 2023 2024 CAPITAL PRODUCT #2 -$4,850,800 $1,328,600 $1,329,800 $1,177,900 $3,068,600 "Cumulative cash flows (See Problem 5-1)" $0 $0 $0 $0 $0 "Discounted cash flows (See Problems 5-3 (Part a) & 5-4 (Part b))" $0 $0 $0 $0 $0 "Cumulative discounted cash flows (See Problems 5-3 (Part a) & 5-4 (Part b))" $0 $0 $0 $0 $0 CAPITAL BUDGETING CALCULATIONS PRODUCT #2 CALCULATE "ANALYSIS: ACCEPTABLE or UNACCEPTABLE?" "Net Present Value (NPV) (See Problems 5-11 (Part c) & 5-12 (Part b))" $0 "Internal Rate of Return (IRR) (See Problems 5-5 & 5-6)" 0.00% "Profitability Index (PI) (See Problem 5-8)" 0.000 "Modified Internal Rate of Return (MIRR) (using the COMBINATION APPROACH) (See Problem 5-20)" 0.00% Reinvestment rate and Finance Rate for MIRR should both be equal to the Target Rate of Return. "Payback Period (PP) (See Problem 5-1)" 0.00 "Discounted Payback Period (DPP) (See Problems 5-3 (Part a) & 5-4 (Part b))" 0.00 CASH FLOWS OVER PROJECT #3's LIFE Target Rate of Return = 12.255% Auto Transferred from your WACC worksheet Net Cash Flows each year Year Number 0 1 2 3 4 YEAR 2020 2021 2022 2023 2024 CAPITAL PRODUCT #3 -$3,822,400 $741,100 $1,377,100 $1,921,100 $2,660,900 "Cumulative cash flows (See Problem 5-1)" $0 $0 $0 $0 $0 "Discounted cash flows (See Problems 5-3 (Part a) & 5-4 (Part b))" $0 $0 $0 $0 $0 "Cumulative discounted cash flows (See Problems 5-3 (Part a) & 5-4 (Part b))" $0 $0 $0 $0 $0 CAPITAL BUDGETING CALCULATIONS PRODUCT #3 CALCULATE "ANALYSIS: ACCEPTABLE or UNACCEPTABLE?" "Net Present Value (NPV) (See Problems 5-11 (Part c) & 5-12 (Part b))" $0 "Internal Rate of Return (IRR) (See Problems 5-5 & 5-6)" 0.00% "Profitability Index (PI) (See Problem 5-8)" 0.000 "Modified Internal Rate of Return (MIRR) (using the COMBINATION APPROACH) (See Problem 5-20)" 0.00% Reinvestment rate and Finance Rate for MIRR should both be equal to the Target Rate of Return. "Payback Period (PP) (See Problem 5-1)" 0.00 "Discounted Payback Period (DPP) (See Problems 5-3 (Part a) & 5-4 (Part b))" 0.00 CASH FLOWS OVER PROJECT #4's LIFE Target Rate of Return = 12.255% Auto Transferred from your WACC worksheet Net Cash Flows each year Year Number 0 1 2 3 4 YEAR 2020 2021 2022 2023 2024 CAPITAL PRODUCT #4 -$5,394,200 $1,294,100 $1,551,600 $2,197,700 $3,518,400 "Cumulative cash flows (See Problem 5-1)" $0 $0 $0 $0 $0 "Discounted cash flows (See Problems 5-3 (Part a) & 5-4 (Part b))" $0 $0 $0 $0 $0 "Cumulative discounted cash flows (See Problems 5-3 (Part a) & 5-4 (Part b))" $0 $0 $0 $0 $0 CAPITAL BUDGETING CALCULATIONS PRODUCT #4 CALCULATE "ANALYSIS: ACCEPTABLE or UNACCEPTABLE?" "Net Present Value (NPV) (See Problems 5-11 (Part c) & 5-12 (Part b))" $0 "Internal Rate of Return (IRR) (See Problems 5-5 & 5-6)" 0.00% "Profitability Index (PI) (See Problem 5-8)" 0.000 "Modified Internal Rate of Return (MIRR) (using the COMBINATION APPROACH) (See Problem 5-20)" 0.00% Reinvestment rate and Finance Rate for MIRR should both be equal to the Target Rate of Return. "Payback Period (PP) (See Problem 5-1)" 0.00 "Discounted Payback Period (DPP) (See Problems 5-3 (Part a) & 5-4 (Part b))" 0.00 CAPITAL BUDGETING ANALYSIS Recap of Each Project's Net Cash Flows and Net Present Value (NPV) From Your Calculations Cash Flows At End of Year Year Number 0 1 2 3 4 -$14,067,400 2020 2021 2022 2023 2024 NPV CAPITAL PRODUCT #1 -$5,885,800 $1,476,800 $1,365,100 $1,393,000 $3,281,400 $0 CAPITAL PRODUCT #2 -$4,850,800 $1,328,600 $1,329,800 $1,177,900 $3,068,600 $0 CAPITAL PRODUCT #3 -$3,822,400 $741,100 $1,377,100 $1,921,100 $2,660,900 $0 CAPITAL PRODUCT #4 -$5,394,200 $1,294,100 $1,551,600 $2,197,700 $3,518,400 $0 "Part 1): Identify all project combinations that are ACCEPTABLE for Global Manufacturing based on the NPV acceptance criterion. (You may not need all the spaces provided.)" "ALL POSSIBLE ACCEPTABLE PROJECT COMBINATIONS examples: (#5 & #7 & #8) or (#5 & #7)" Cumulative Project Cash Flows At End of Year "COMBINED Project Cost 2020 " 2021 2022 2023 2024 NET PRESENT VALUE (NPV) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 "Part 2): Since Global's management has imposes a Capital Budget Constraint (called Capital Rationing) you must now select those project combinations from Part (1) that DO NOT cost more than the Capital Budget Constraint shown below. (You may not need all the spaces provided.)" Capital Budget Constraint = $13,100,000 Cumulative Project Cash Flows At End of Year "ALL POSSIBLE ACCEPTABLE AND AFFORDABLE PROJECT COMBINATIONS examples: (#5 & #7 & #8) or (#5 & #7)" "COMBINED Project Cost 2020 " 2021 2022 2023 2024 NET PRESENT VALUE (NPV) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Part 3): Which ONE of these AFFORDABLE project combinations identified in Part (2) above will MAXIMIZE the corporate value of Global Manufacturing? Cumulative Project Cash Flows At End of Year SINGLE AFFORDABLE PROJECT COMBINATION THAT WILL MAXIMIZE CORPORATE VALUE "COMBINED Project Cost 2020 " 2021 2022 2023 2024 NET PRESENT VALUE (NPV) $0 $0 $0 $0 $0 $0 Part 4): If this maximizing project combination selected Part (3) were implemented how much could the firm expect its corporate value to increase? Expected Increase in

Corporate Value ($) = $0