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Need assistance with answering the attached questions in excel. Please show work in excel. Thank you 9-1 You are a financial analyst for Damon Electronics
Need assistance with answering the attached questions in excel. Please show work in excel.
Thank you
9-1 You are a financial analyst for Damon Electronics Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects X and Y. Each project has a cost of $10,000, and the required rate of return for each project is 12 percent. The projects' expected net cash flows are as follows: Expected Net Cash Flows Year Project X 0 Project Y $(10,000) $(10,000) 1 6,500 3,500 2 3,000 3,500 3 3,000 3,500 4 1,000 3,500 a.Calculate each project's traditional payback period (PB), net present value (NPV), and internal rate of return (IRR), b.Which project or projects should be accepted if they are independent? c. Which project should be accepted if they are mutually exclusive? d.How might a change in the required rate of return produce a conflict between the NPV and IRR rankings of these two projects? Would this conflict exist if r were 5 percent? (Hint: Plot the NPV profiles.) e.Why does the conflict exist? 9-2 Compute the internal rates of return (IRRs) for following capital budgeting projects: Year 0 Project G $(23,000) Project P $(48,000) Project V $(36,000) 1 7,900 0 2 7,900 0 0 3 7,900 0 0 4 7,900 81,000 Based on IRRs, under what conditions should each project be purchased? (10,000) 75,000 9-3 Plasma Blood Services (PBS) is deciding whether to purchase a new blood cleaning machine that is expected to generate the following cash flows. What is the machine's IRR? Year 0 9-4 Cash Flow $(140,000) 1 60,000 2 60,000 3 60,000 Following is information about two mutually exclusive capital budgeting projects: Cash Flows Year 0 1 Project Q $(4,000) 0 Project R $(4,000) 3,500 2 5,000 If the firm's required rate of return is 10 percent, which project should be purchased? 1,100Step by Step Solution
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