Answered step by step
Verified Expert Solution
Question
1 Approved Answer
MAKE ANSWER IN EXCEL SPREAD SHEET AND SHOW ALL THE EQUATIONS AS WELL. NEED ANWERS A THROUGH E ! ! ! ! ! ! Capital
MAKE ANSWER IN EXCEL SPREAD SHEET AND SHOW ALL THE EQUATIONS AS WELL.
NEED ANWERS A THROUGH E
Capital Budgeting Techniques This assignment must be completed in Excel. If your work is not completed in Excel, it won't be graded. CSUSM is considering two mutually exclusive investments. The projects' expected net cash flows are as follows: Expected Net Cash Flows Year 1 2 3 4 5 Construct NPV profiles for Projects A and B.(20 points) Calculate each project's IRR (15 points). Project A (20,000) 11,000 20,000 30,000 45,000 Project B 15,000 15,000 15,000 15,000 15,000 a. b. d. e. If the required rate of return for each project is 12 percent, which project should CSUSM select? If the required rate of return is 9.5 percent, what would be the proper choice? If the required rate of return is 15.5 percent, what would be the proper choice? (15 points) At what rate do the NPV profiles of the two projects cross? (20 points) Project A has a large cash flow in Year 5 associated with ending the project. CSUSM's management is confident of Project A's cash flows in Years O to 4 but is uncertain about what its Year 5 cash flow will be. (There is no uncertainty about Project B's cash flows.) Under a worst-case scenario, Project A's Year 5 cash flow will be $41,000, whereas under a best-case scenario, the cash flow will be $51,000. Redo parts (a), (b), and (d) for each scenario, assuming a 12.5 percent required rate of return. If the required rate of return for each project is 12.5 percent, which project should be selected under each scenario? (30 points)
Step 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