Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hi. Would you mind helping me with another assignment? I would appreciate if you could complete the spreadsheet and required word document. FINC 3304 -

Hi. Would you mind helping me with another assignment? I would appreciate if you could complete the spreadsheet and required word document.image text in transcribed

FINC 3304 - Business Finance Mini Project 3 Capital Budgeting The goal of this mini project is to explore the topic of capital budgeting. The mini project requires you to work in Excel with the provided spreadsheet. Be sure to fill in the yellow boxes in the Excel file for full credit. In addition, type up a report in Word with an introduction (description of the mini project), findings (answer assignment questions, plots, etc.), and conclusion (summary). Your grade will depend on both quantity and quality. Upon completion, please submit both your Word report and Excel file to blackboard. Each question (A, B, C, D, E, and F) is worth 11.67 points (total of 70 points), the report 15 points, and the Excel file 15 points. Capital Budgeting Flower Engineering is considering two mutually exclusive investments. The projects' expected net cash flows are as follows: Time 0 1 2 3 4 5 6 7 Expected Net Cash Flows Project A Project B ($375) ($675) ($300) $200 ($200) $200 ($100) $200 $600 $200 $600 $200 $926 $200 ($200) $200 Note that cash outflows (costs) are given in parenthesis. Employ the excel file to answer the following questions: Part 1: Net Present Value A) Use the Excel NPV function to calculate the NPV for each project at each cost of capital (10 points) B) Construct NPV profiles (a data table of project NPVs relative to differing costs of capital) for Projects A and B and graph them in one plot (label the x-axis, y-axis, and title) (10 points) Part 2: Internal Rate of Return C) Use the Excel IRR function to calculate each projects IRR (10 points) D) Use the Excel MIRR function to calculate each projects MIRR for each cost of capital (10 points) Part 3: Payback E) Calculate the cumulative cash flow and the regular payback using the formula for each project (10 points) F) Calculate the profitability index for each project (10 points) FINC 3304 - Mini Project 3 - Capital Budgeting Last Name First Name Flower Engineering is considering two mutually exclusive investments. The projects' expected net cash flows are as follows: Time 0 1 2 3 4 5 6 7 Expected Net Cash Flows Project A Project B ($375) ($675) ($300) $200 ($200) $200 ($100) $200 $600 $200 $600 $200 $926 $200 ($200) $200 Part 1: A) Net Present Value Cost of capital = 12% Cost of capital = 18% NPV A = NPV A = (See example 2 at https://support.office.com/en-US/article/NPV-function-8672CB67-2576-4D07-B67B-AC28ACF2A568) NPV B = NPV B = Hint: Use the excel NPV function "=NPV(rate,CF1:CFN)" Note: The range of values in the NPV function should not include the initial cost (CF 0). Make sure to add this separately (NPV+CF 0) B) NPV Profiles and Graph WACC Project A Project B Hint: Find the NPV for each WACC for each project using the excel NPV function methodology 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% Part 2: C) IRR IRR A = (See https://support.office.com/en-US/article/irr-function-b5752d46-e623-494b-9191-b8ca75cb9c76) IRR B = Hint: Use the excel IRR function "=IRR(CF0:CFN)" D) MIRR Cost of capital = 12% Cost of capital = MIRR A = MIRR B = 18% MIRR A = MIRR B = (See https://support.office.com/en-US/article/MIRR-function-B020F038-7492-4FB4-93C1-35C345B53524) Hint: Use the excel MIRR function "=MIRR(CF 0:CFN, Cost of capital, Cost of capital)" Part 3: E) Payback Project A Time period Cash flow Cumulative cash flow Payback 0 (375) 1 (300) 2 (200) 3 (100) 4 600 5 $600 6 $926 7 ($200) 0 (675) 1 200 2 200 3 200 4 200 5 $200 6 $200 7 $200 Project B Time period Cash flow Cumulative cash flow Payback F) Profitability Index Cost of capital = NPV of future cash flows for A: Initial cost for A: PI of A: PV of future cash flows for B: Initial cost for A: PI of B: 12% Hint: Use the NPV function for all cash flows excluding the initial cost Hint: Use the NPV of future cash flows / Initial cost

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investments

Authors: Zvi Bodie

12th Edition

1260819426, 9781260819427

More Books

Students also viewed these Finance questions

Question

Define induction and what are its objectives ?

Answered: 1 week ago

Question

Discuss the techniques of job analysis.

Answered: 1 week ago

Question

How do we do subnetting in IPv6?Explain with a suitable example.

Answered: 1 week ago

Question

Explain the guideline for job description.

Answered: 1 week ago

Question

What is job description ? State the uses of job description.

Answered: 1 week ago

Question

6. How can a message directly influence the interpreter?

Answered: 1 week ago