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PLEASE ONLY SHOW HOW TO DID IN EXCEL AND ONLY HARD CODED FORMULAS D 1 Year 2 Cash flow -750,000 500,000 500,000 3 500,000 4
PLEASE ONLY SHOW HOW TO DID IN EXCEL AND ONLY HARD CODED FORMULAS
D 1 Year 2 Cash flow -750,000 500,000 500,000 3 500,000 4 500,000 500,000 -2,000,000 5% 10% 45% 4 Cost of capital,r 5 NPV 6 Accept/reject? 3 Part d: to decide on a range of cost of capital to accept/reject, make a table of NPV for different r NPV AFAMAA 10 Cost of capital, 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 30% 34% 38% 42% 46% 50% 54% project assuming the "reinvestment or financing rate is also the disco rate (10%)? 11. (Multiple IRRs) You would like to open an investment company named Ripem. The cost of building up the company is $750,000. You offer your clients the following deal: For five annual deposits of $500,000 for the next 5 years, you will pay them $2 million at year 6. Your cash flow is expected to be as follows: CI DI EI FI G 2 A 5 6 1 Year 2 Cash flow |-750.000 500,000500,000500,000 500,000 1500.000-2.000.000 a. If your cost of capital is 5%, should you make the investment? b. If your cost of capital is 10%, should you make the investment? c. If your cost of capital is 45%, should you make the investment? d. For what range of cost of capital should you accept the project? Explain. c inactment
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