hello i need help with this question please
Discuss the capital budgeting process (how projects are approved) and the data inputs used in selecting among proposals. Then using the attached discounted cash flow worksheet ~ respond to this assignment. Air Co. is expanding its operations. It is considering adding facilities in either Portland, Oregon or Tampa Bay, Florida. CALCULATE THE FOLLOWING MEASURES FOR THE AIR CO. PROJECTS. . Net Present Value (use =NPV in Excel) . Internal Rate of Return (use =IRR in Excel) . The payback period (not discounted) The profitability index RELEVANT FINANCIAL DATA FOLLOWS. . The useful life of the new facility is 10 years. . The company uses 5% as the hurdle rate in order to discount future cash flows. . Select the preferred project. (000s omitted) Portland Tampa Bay Initial Investment in year 0 $100,000 $150,000 Cash received per year from additional sales revenues (years 1-5) 25,000 40,000 Cash paid per year for operating costs (years 1-5) (15,000) (18,000) Major Maintenance (year 6) (2,500) (3,000) Cash Received per year (years 6-10) 30,000 50,000 Cash paid per year (years 6-10) (18,000) (21,000) Salvage value cash received upon disposal (year 10) 15,000 25,000Dear all: Please digest the info and show your calculation for the following and let me know if we should go ahead with this project. Please show step by step calculations. Thanks. 0 Net Present Value [use =NPV in Excel] 0 Internal Rate of Return (use =IRR in Excel) 0 The payback period (not discounted] o The protability index 433 X Jx years Name Box A B C D E F G H K L M N 0 13 14 Payback Period calculate years 15 Net Present Value S 16 Internal Rate of Return #NUM! 17 PV of future cash flows S 18 Profitability Index #DIV/O! times 19 20 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total 21 Tampa Bay 22 Cash from (used): 23 Initial Investment 50 24 Sales Revenues 6 Salvage Value 26 OperatingExpenses 27 Major Maintenance 28 Net Cash Flow $0 50 SO SO SO $0 SO 29 Cum Cash Flow so 30 Hurdle Rate 32 33 Payback Period calculate years 34 Net Present Value S 35 Internal Rate of Return #NUM! 36 PV of future cash flows S 37 Profitability Index #DIV/O! times 38 39 (000's omitted) Portland Tampa Bay 100,000 150,000 40 Initial Investment in year 0 Cash received per year from additional sales 25,000 40,000 41 revenues (years 1-5) Cash paid per year for 42 operating costs (years 1-5) (15,000) (18,000) Major Maintenance (year 6 (2,500) (3,000) Cash Received per year 50,000 44 years 6-10) 30,000 Cash paid per year (years 6- 45 101 (18,000) (21,000) Salvage value cash received upon disposal 15,000 25,000 [year 10)20 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total 21 Tampa Bay 22 Cash from (used): 23 Initial Investment SO 24 Sales Revenues 25 Salvage Value 26 Operating Expenses 27 Major Maintenance 28 Net Cash Flow SO SO So 50 SO SO SO SO SO SO 29 Cum Cash Flow SO 30 31 Hurdle Rate 32 33 Payback Period calculate years 34 Net Present Value 35 Internal Rate of Return #NUM! 36 PV of future cash flows 37 Profitability Index #DIV/O! times 38 39 (000's omitted) Portland Tampa Bay Initial Investment in year 0 100,000 150,000 40 Cash received per year from additional sales 25,000 40,000 41 revenues (years 1-5) Cash paid per year for 42 operating costs (years 1-5) (15,000) (18,000) Major Maintenance (year 43 6) (2,500) (3,000) Cash Received per year 44 (years 6-10) 30,000 50,000 Cash paid per year (years 6- 10) (18,000) (21,000) 45 Salvage value cash received upon disposal 15,000 25,000 46 year 10) 47
