Answered step by step
Verified Expert Solution
Question
1 Approved Answer
hey please i need it by fruday 11:59 pm. i attached the question. FIN 301 - Principles of Finance Excel and Writing Assignment Assignment Description:
hey please i need it by fruday 11:59 pm. i attached the question.
FIN 301 - Principles of Finance Excel and Writing Assignment Assignment Description: ABC Corporation has a machine that requires repairs or should be replaced. ABC has evaluated the two options and calculated the cash flows resulting from each option as follows: Option A: Repair the Machine Year Cash Flow 0 -50,000 1 31,500 2 20,100 3 18,900 4 17,100 5 13,700 Option B: Buy a new Machine Year Cash Flow 0 -400,000 1 91,300 2 155,000 3 127,800 4 126,900 5 125,100 You have recently been hired by ABC Corporation and your first assignment is to help them decide which of these two options should be pursued. You would like to apply Capital Budgeting and Time Value of Money concepts you have learnt in FIN 301 to analyze the problem and present your recommendation to your boss, Ms. Jane Austen. Conduct the analysis by calculating the following for each option: 1. 2. 3. 4. 5. Net Present Value (NPV) Internal Rate of Return (IRR) Profitability Index (PI) Payback Period (PB) Crossover Rate The company has a Weighted Average Cost of Capital (WACC) (discount Rate) of 12%. For this analysis, your boss John Doe asked you to calculate NPV at three different discount rates: 12% (the current WACC), 14% and 16%. Things to turn in: 1. A one-page memo explaining the results of your analysis and your recommendation. The memo should include important results of your analysis such as a summary table or graph. The memo is limited to one page so be very selective on what information to include. 2. An Excel spreadsheet showing calculation of above at the 3 discount rates and graph on NPV Profile. Assume benchmark for payback period. Write =if( ) statements to offer dynamic decisionsStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started