Hello. I'm trying to solve Problem 3 on the attached spreadsheet. It has part B and C that I am struggling with. I cannot figure out if I am calculating the discount rate or NPV correctly, with the income statement and balance sheet information provided, and whether to accept or reject the "project". This also causes me issues then with the part C. Are you able to help me?

Rasmussen College - BUS 330 - Week 5 Assignment Problem 1 1. A company is evaluating a project with the following projected cash flow characteristics. company requires a return greater than 9% for this project and a payback period of less t the company undertake the project? Explain. Annual Payback Payment Calculation ($75,000) ($75,000) $5,000 ($70,000) $25,000 ($45,000) $25,000 ($20,000) $10,000 ($10,000) $50,000 $40,000 $40,000 $80,000 Year 0 1 2 3 4 5 6 a. b. c. d. NPV: IRR: Payback period: $33,365.26 19.7% 4.20 The project should be undertaken because the NPV is positive and because the IRR is higher than the required 9% ra flow characteristics. Calculate the NPV, IRR and Payback period. Assume the back period of less than 5 years to undertake it. Based on your findings should er than the required 9% rate of return. Also, the payback period is only 4.2 years. Rasmussen College - BUS 330 - Week 5 Assignment Problem 2 2. A company is evaluating between two mutually exclusive projects. The estimated cash fl for both projects. The discount rate related to Project A is 12% and the discount rate rela a) Assuming the company is trying to maximize NPV which project should it undertake? b) Assume the company is trying to maximize the IRR, which project should it undertake? Year 0 1 2 3 4 5 6 Discount Rate: a) NPV: b) IRR: Project A ($100,000) $0 $0 $0 $0 $0 $250,000 Project B ($5,000) $1,500 $1,500 $1,500 $1,500 $1,500 $3,000 12% $26,658 16.5% 16% $1,143 23.6% a) The company should accept project A due to the NPV being higher. b) The company should accept project B due to the IRR being higher. Accept or Reject? Accept or Reject? ects. The estimated cash flows are indicated below. Calculate the NPV and IRR % and the discount rate related to Project B is 16%. ject should it undertake? roject should it undertake? ccept or Reject? ccept or Reject? Rasmussen College - BUS 330 - Week 5 Assignment Problem 3 3. Below are the relevant financial statement details of a project. Please anwer the subseq Year 0 Income Statement: Revenues Cost of Goods Sold Year 1 Year 2 Year 3 $300,000 $325,000 $350,000 ($180,000) ($195,000) ($210,000) Gross Profit $120,000 $130,000 $140,000 SG&A ($30,000) ($32,500) ($35,000) Depreciation Expense ($50,000) ($50,000) ($50,000) $40,000 $47,500 $55,000 ($16,000) ($19,000) ($22,000) $24,000 $28,500 $33,000 $0 ($2,500) ($2,500) $0 ($2,500) ($2,500) $0 ($2,500) ($2,500) Operating Income Taxes Operating Income Balance Sheet Items: Investments in equipment Investment in working capital Net Balance Sheet Changes ($250,000) ($25,000) ($275,000) a. Calculate the projected cash flows. Year 0 Net Income Addback Depreciation Net Balance Sheet Changes Cash Flows $ Year 1 Year 2 $24,000 $28,500 ($50,000) ($50,000) ($275,000) ($2,500) ($2,500) (275,000) $ (28,500) $ (24,000) $ Year 3 $33,000 ($50,000) ($2,500) (19,500) b. If the company requires a rate of return of at least 12% should it accept this project? Discount rate: NPV: Accept or Reject? 57% ($297,630) c. Assume the following scenario: i) SG&A increases by 20% in each year, ii) Investment in equipment in Year 0 increases by 50% Should the company accept the project in this scenario? Note, the increase in the initial investment in equipment will require a corresponding change in the Deprec depreciated in a straight-line and has no value remaining at the end of the project. Show details and calculations as needed. se anwer the subsequent questions. Problem 3-C. Year 4 Year 5 $375,000 $400,000 ($225,000) ($240,000) $150,000 $160,000 Gross Profit ($37,500) ($40,000) SG&A ($50,000) ($50,000) Depreciation Expense $62,500 $70,000 ($25,000) ($28,000) $37,500 $42,000 Income Statement: Year 0 Revenues Cost of Goods Sold Operating Income Taxes Operating Income Balance Sheet Items: $0 ($2,500) ($2,500) $0 $25,000 $25,000 Year 4 Year 5 $37,500 $42,000 ($50,000) ($50,000) ($2,500) $25,000 $ (15,000) $ 17,000 Investments in equipment Investment in working capital Net Balance Sheet Changes ($125,000) ($25,000) ($150,000) ng change in the Depreciation. The equipment is Year 1 $300,000 Year 2 $325,000 Year 3 Year 4 Year 5 $350,000 $375,000 $400,000 ($180,000) ($195,000) ($210,000) ($225,000) ($240,000) $120,000 $130,000 $140,000 $150,000 $160,000 ($90,000) ($97,500) ($105,000) ($112,500) ($120,000) ($25,000) ($25,000) ($25,000) ($25,000) ($25,000) $5,000 $7,500 $10,000 $12,500 $15,000 ($2,000) ($3,000) ($4,000) ($5,000) ($6,000) $3,000 $4,500 $6,000 $7,500 $9,000 $0 ($2,500) ($2,500) $0 ($2,500) ($2,500) $0 ($2,500) ($2,500) $0 ($2,500) ($2,500) $0 $25,000 $25,000