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Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for both projects is 8 percent. Project A:
Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for both projects is 8 percent. |
Project A: | Nagano NP-30. |
Professional clubs that will take an initial investment of $860,000 at Time 0. Introduction of new product at Year 6 will terminate further cash flows from this project. |
Project B: | Nagano NX-20. |
High-end amateur clubs that will take an initial investment of $610,000 at Time 0. Introduction of new product at Year 6 will terminate further cash flows from this project. |
Year | NP-30 | NX-20 | ||||
0 | $ | 860,000 | $ | 610,000 | ||
1 | 327,000 | 243,000 | ||||
2 | 317,000 | 244,000 | ||||
3 | 292,000 | 233,000 | ||||
4 | 278,000 | 213,000 | ||||
5 | 188,000 | 168,000 | ||||
Complete the following table: (Do not round intermediate calculations. Enter the IRR as a percent. Round your profitability index (PI) answers to 3 decimal places (e.g., 32.161) and other answers to 2 decimal places (e.g., 32.16).) |
NP-30 | NX-20 | ||||||
NPV | $ | $ | |||||
IRR | % | % | |||||
PI | |||||||
What is the incremental IRR of investing in the larger project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) |
Incremental IRR | % |
How would I enter this on excel as well? Thanks
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