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please answer e, f, and g, the others have been verified. Excel Online Structured Activity: Capital budgeting criteria A company has a 11% WACC and
please answer e, f, and g, the others have been verified.
Excel Online Structured Activity: Capital budgeting criteria A company has a 11% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 0 1 2 3 4 5 6 7 Project A Project B -$300 -$400 - $387 $134 -$193 $134 -$100 $134 $600 $134 $600 $134 $850 $134 -$180 $0 The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. Project A: $ 240.64 Project B: $ 166.89 b. What is each project's IRR? Round your answer to two decimal places. Project A: 18.10 % Project B: 24.51 % c. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Round your answer to two decimal places. Do not round your intermediate calculations. Project A: 14.59 % Project B: 16.67 % d. From your answers to parts a-c, which project would be selected? Project A If the WACC was 18%, which project would be selected? Project B e. Construct NPV profiles for Projects A and B. Round your answers to the nearest cent. Do not round your intermediate calculations. Negative value should be indicated by a minus sign. Discount Rate NPV Project A NPV Project B 0% $ $ 5 $ $ 10 $ $ 12 $ $ 15 $ $ 18.1 $ $ 24.51 $ $ f. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations. % g. What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places. Do not round your intermediate calculations. Project A: % Project B: % Capital budging or WADO 11.00% 0 4 6 PA 1 SAR) 2 $190 3 -3100 5 SADO SR50 7 -3180 7 -$400 $141 $134 $13 $134 $1M $181 93 Fom. ANIA ANI 10 11 Pred UV Camions 12 NPA 13 14 NPV. 15 16 Phool Cabutors 17 IRRA 18 19 IRR. 20 21 AW 22 MIRR 24 24 Automedy Www.can be conducted as: ANA ANV ANA 0 $300 1 SJB7 2 $190 + S000 $100 5 $800 B $850 26 Project $100 28 PV of Year Outlow 29 PV of Year 2 Otom 30 PV of Year 3 Outlow 31 PV of Your Touc 32 Formulas NW INV EN ANA Formulas ANTA ANVA ANVA FV of Year Inbow at Yoar? FV of Year 5 Inow at Year? FV of Year 4 Inow at Yar 7 ENA ANNA Sum of Inow FVS 34 35 36 Sum of Outlow Pus 37 38 N 39 PV 40 PM 41 FV 42 VYHMIRRA | F Fom.ar 7 sco 0 $0.00 ANA ANIA 45 45 Adama MARR.Concu 4 0 -$400 1 $134 2 $134 3 $134 5 $134 6 $134 7 $0 $134 Formulas #N/A #N/A #N/A #N/A #N/A #N/A FV of Year 6 Inflow at Year 7 FV of Year 5 Inflow at Year 7 FV of Year 4 Inflow at Year 7 FV of Year 3 Inflow at Year 7 FV of Year 2 Inflow at Year 7 FV of Year 1 Inflow at Year 7 #N/A #N/A Sum of Inflow FVs Formulas 7 $0.00 0 $0.00 #N/A 46 Alternatively, MIRR, can be calculated as: 47 48 Project B 49 50 51 52 53 54 55 56 57 58 Sum of Outflow PVs 59 60 N 61 PV 62 PMT 63 FV 64 I/YR = MIRR3 65 66 Project Acceptance: 67 WACC 68 Accept 69 70 WACC 71 NPVA 72 NPVB 73 Accept 74 75 NPV Profiles: 76 Discount Rates 77 78 79 80 81 82 83 84 85 11.00% #N/A 18.00% $2.66 $68.68 #N/A NPVA Discount Rates NPVA NPV: $68.68 NPV. $2.66 $2.66 $68.68 0% 5.00% 10.00% 12.00% 15.00% 18.10% 24.51% 0% 5.00% 10.00% 12.00% 15.00% 18.10% 24.51% #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A NPV Profiles $1.20 $1.00 $0.80 - $0.60 $0.40 $0.20 $0.00 0% 5.00% 10.00% 12.00% 15.00% 18.10% 24.51% Calculation of Crossover Rate: Project A 0 -$300 1 -$387 2 -$193 3 -$100 4 $600 5 $600 6 $850 7 -$180 Project B -$400 $134 $134 $134 $134 $134 $134 $0 Project Delta #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A Crossover Rate = IRR #N/A Project MIRR Calculations at WACC = 18% WACC 18.00% MIRRA MIRRE #N/A #N/AStep by Step Solution
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