ON EXCEL

The director of capital budgeting for Giant Inc. has identified two mutually exclusive projects, L and S, with the following expected net cash flows and a required rate of return of 10 percent: Expected Net Cash Flows Year Project S Project L ($210,000) 0 ($161,000) 90,000 10,000 - 0 20,000 60,000 80,000 20,000 60,000 + 90,000 90,000 10,000 Build an automatic spread sheet that calculates: 1. the NPV of both projects with 2 different methods (NPV of excel and formula). 2. The IRR of both projects using the solver function 3. The IRR using the IRR function of Excel 4. Do the NPV profiles cross? 5. Create a data table that shows how NPV changes when the required rate of return changes and plot the NPV profiles. 6. Find the crossover point if they cross; a. using the graph b. build a section in the spread sheet that calculates the crossover point using goal seek or solver 7. Build a section in the spreadsheet that calculates the MIRR for every project if the reinvestment rate is 6%, 10%, 15% and 20% 8. Explain how the director of this company can use your results to make an informed decision