Question
Please provide excel formulas for the answers: The company assumes a discount rate of 6% for all projects and wants the shortest payback period possible
Please provide excel formulas for the answers:
The company assumes a discount rate of 6% for all projects and wants the shortest payback period possible while maximizing profits.
Calculate the Internal Rate of Return (IRR)- Using excel formula
Calculate the Minimum payback period- Using excel formula
Calculate the NPV of projected cash flows- Using excel formula
This is all I am given to answer these questions.
| Expansion Project Title | Project Description and Details | Project Cost (Initial Investment) | First Year Cash Flow | Annual Growth Rate (5 years) | Expenses as a percentage of Revenues | Payback Period | NPV | IRR | |
| Development of Straight Caffine | This project is another brain child of the research and development team. It extracts the caffine that is naturally found in coffee and concentrates it into a liquid, squirtable additive that can be used in any drink. R&D has been using variations of this liquid caffine to increase department productivity. Since it already exists, investment would be minimal. | $6,500,000 | $2,500,000 | 4% | 32% | ||||
| Calculation of Minimum Payback Period: | Years | ||||||||
| NPV of Projected Cash Flows | |||||||||
| Year 0 Cash Flow | Year 1 Cash Flow | Year 2 Cash Flow | Year 3 Cash Flow | Year 4 Cash Flow | Year 5 Cash Flow | ||||
| Projected Revenues at annual growth rate | |||||||||
| Projected Expenses at 32% of Revenue | |||||||||
| Annual Cash Flows | |||||||||
| Discount rate for each year (6%) | |||||||||
| Present value of cash flows | |||||||||
| NPV of Projected Cash Flows | |||||||||
| Internal Rate of Return (IRR): |
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Microeconomics
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
2nd edition
1464187029, 978-1464189104, 1464189102, 978-0716759751, 716759756, 978-1464187025
