Instructions

9.5 table:

Capital budget Model	OVERALL USE	Small firm ranking	large firm ranking
Pay back	56.74%	3	3
Net present value	74.93%	2	1
Internal Rate of return	75.61%	1	2
Profitability index	11.87%	4	4

In Chapter 9 after table 9.5, there is information about Trout Pro Shops. Use the information to calculate the NPV, IRR, and MIRR.

Post your work in the form of an excel spreadsheet and discuss if the project was a good idea,

what you think is the best method, and if the three methods agree or disagree and why.

USE ECXEL -

FOR = IRR(B1:B10)

FOR =MIRR(B1:B10,B11,B12)

FOR = NPV(0.09,B2:B10)

E2 =E1+B1

	A	B	C	D	E
1	Initial investment	(20,000)	10.20%
2	Cash flow year 1	40,000
3	Cash flow year 2	130,000
4	Cash flow year 3	320,000
5	Cash flow year 4	500,000
6	Cash flow year 5	500,000
7	Cash flow year 6	500,000
8	Cash flow year 7	500,000
9	Cash flow year 8	500,000
10	Cash flow year 9	500,000
11	Discount Rate	0.09
12	Reinvestment rate	0.09