Name. Student #: Class Section Capital invested $5,000,000. Cost of Capital (COC) is _%. Cut Off period is 2 years. Compute PB, DPB, NPV, PI, and IRR. Use next page for your capital analysis. 1. Use the cost of Capital by your name in the Discount rate file 2. Delete the examples in red. Year CF Cum CF CF/(1+COC)N = PVCF Cum PVCF 0 ($5,000,000) 1 $1,100,000 $1,100,000 $1,100,000 / (1.10) $1,000,000.000 $1,000,000,000 2 $800,000 800,000 + 1,100,000 =$ 1,900,000 $1,800,000/(1.10)2 = $ 1,487,603.306 $1,487,603.306 +1,000,000.000 = $1487,306.3060 $1,200,000 4 4 $800,000 5 $800,000 6 $800,000 IN $350,000 $400,000 9 $350,000 10 $300,000 Student ID: Class Section Names Note: 1. Show computations. 2. Use the examples. 1.Calculate the Payback Period for this project. Unrecovered Cashflow Year bewe full rewery+ Case flow in the year of recovery Examples: 1. Payback Perlod 5.75 years > 2 years Cutoff Period 2. Decision rule: Cutoff Period PB (Reject); Cutoff Period > PB (Accept); Cutoff Period PB (Indifferent, Circle your decision. 3. Why: Reject the project because the payback period is 5 years to recover the investment. This is not good for management because and will not add value to the company and 9 months which is greater than the set period of 2 years. 2. Calculate the Discounted Payback Period for this project. Year before will recovery + Unrecovered Cash flow Casle flow in the year of Wil recovery Decision rule: Why 3.Calculate the project's IRR. (Lise your Calculator) IRR- Decision rule: Why: 4.Calculate the project's NPV. (PV of Cash flows-Initial Investment) Decision rule: Why: 6. Compute Profitability Index (PV of Cash flows / Initial Investment) Decision rule: Why: Name. Student #: Class Section Capital invested $5,000,000. Cost of Capital (COC) is _%. Cut Off period is 2 years. Compute PB, DPB, NPV, PI, and IRR. Use next page for your capital analysis. 1. Use the cost of Capital by your name in the Discount rate file 2. Delete the examples in red. Year CF Cum CF CF/(1+COC)N = PVCF Cum PVCF 0 ($5,000,000) 1 $1,100,000 $1,100,000 $1,100,000 / (1.10) $1,000,000.000 $1,000,000,000 2 $800,000 800,000 + 1,100,000 =$ 1,900,000 $1,800,000/(1.10)2 = $ 1,487,603.306 $1,487,603.306 +1,000,000.000 = $1487,306.3060 $1,200,000 4 4 $800,000 5 $800,000 6 $800,000 IN $350,000 $400,000 9 $350,000 10 $300,000 Student ID: Class Section Names Note: 1. Show computations. 2. Use the examples. 1.Calculate the Payback Period for this project. Unrecovered Cashflow Year bewe full rewery+ Case flow in the year of recovery Examples: 1. Payback Perlod 5.75 years > 2 years Cutoff Period 2. Decision rule: Cutoff Period PB (Reject); Cutoff Period > PB (Accept); Cutoff Period PB (Indifferent, Circle your decision. 3. Why: Reject the project because the payback period is 5 years to recover the investment. This is not good for management because and will not add value to the company and 9 months which is greater than the set period of 2 years. 2. Calculate the Discounted Payback Period for this project. Year before will recovery + Unrecovered Cash flow Casle flow in the year of Wil recovery Decision rule: Why 3.Calculate the project's IRR. (Lise your Calculator) IRR- Decision rule: Why: 4.Calculate the project's NPV. (PV of Cash flows-Initial Investment) Decision rule: Why: 6. Compute Profitability Index (PV of Cash flows / Initial Investment) Decision rule: Why
