For each project, calculate the NPV, IRR, profitability index (PI) and the payback period. For each capital budgeting decision tool, indicate if the project should be accepted or rejected, assuming that each project is independent of the others. Important Note: The venture capital folks have a firm maximum payback period of four years. Risk free rate = 1.10%, MRP = 9.5%, Required return = 14.40% Yes excel is fine

Expected cash flows for the four potential projects that Avalon is considering as shown below:

Year	Project A	Project B	Project C	Project D
0	-$7,250,000	-$8,500,000	-$6,500,000	-$4,500,000
1	$2,000,000	$1,000,000	$2,000,000	$2,000,000
2	$2,500,000	$1,500,000	$2,000,000	$2,000,000
3	$3,000,000	$2,000,000	$2,500,000	$1,000,000
4	$1,000,000	$2,000,000	$2,500,000	$1,000,000
5	$1,000,000	$1,600,000	$2,000,000	$500,000
6	$1,000,000	$1,600,000		$500,000
7		$1,500,000
8		$1,500,000
9		$1,500,000
10		$1,500,000

I have provided a suggested template for your final answers. Below the grid (and/or next page) is where you should show all your required backup calculations. If you are working this in Excel, feel free to submit your Excel sheet, where the equations in the cells will provide the required backup. Be sure to clearly indicate the required rate of return for each project (you calculated this in Problem 3).

		Year	Project A	Project B	Project C	Project D
Points		Req. Return (use 2 decimals xx.xx%)
4	4a	NPV (to nearest $1)
1	4b	NPV accept/reject
2	5a	IRR (xx.xx%)
1	5b	IRR accept/reject
2	6a	PI (show 2 decimals)
1	6b	PI accept/reject
2	7a	Payback Period (x.x years)
1	7b	Payback accept/reject