Cubbies Corporation is a relatively young company that has enjoyed great financial success and a very strong growth pattern. However, Cubbies's management realizes that the company has outgrown its "seat of the pants" management style, and must start to develop more sophisticated means of analyzing financial decisions. For example, the company is currently considering two projects, both of which have the same initial investment and, over a 6-year life, will return approximately the same amount of income to the company. To aid in choosing between these projects, the CFO has asked for an Excel model that can determine each project's net present value, profitability index, payback period, and internal rate of return, based on the projects cash flow projections.

Your job is to develop a program that can analyze these projects, but that is also flexible enough to handle other projects with a variety of lives, cash flow patterns, and hurdle rates.

Following are the specifics regarding the projects currently under consideration:

Project A: This project would require an initial investment of $875,000 to replace current equipment with newer technology. The replaced equipment could be sold immediately for $30,000. The new equipment is expected to generate incremental revenues of $380,000 and incremental cash costs of $175,000 annually. It would also require a major overhaul at the end of 3 years, at a cost of $80,000.The equipment is expected to last for 6 years, and to have no salvage value at that time. This project would require initial working capital of $60,000.

Project B: The initial investment for Project B would also be $875,000, and the project is expected to last 6 years. This would be a new venture for Cubbies, so no existing equipment would be sold. Because it is a new business, revenues are expected to grow from $150,000 in year 1, to $250000 in year 2, to $450,000 annually in years 3 through 6. Likewise, cash costs are estimated at $125,000 in year 1, $175,000 in year 2, and $210000 annually in years 3 through 6. The equipment is expected to have a salvage value fo $90,000 at the end of 6 years.

Hurdle Rate: 8% for both projects.

Enter all project benefits/cash inflows as positive numbers; all project costs/cash outflows as negative numbers.

'Net Annual Cash Flows' formula should sum lines 8 through 13.

Inputs from PV table, 'Present Value Factor' should refer to hurdle rate.

Question: I would like to make sure that my numbers look correct and follow the instructions.