Question
Please show work on excel, like formulas for how you got the answers please. 1) Calculate the Payback Period, Internal Rate of Return, Net Present
Please show work on excel, like formulas for how you got the answers please.
1) Calculate the Payback Period, Internal Rate of Return, Net Present Value, and Modified IRR and Discounted PBP for both of the two mutually exclusive projects listed below. Both projects are "new" projects. Use Excel for this problem. You must use formulas where appropriate. Answers are values only in Excel. [10 points] Lemon Juice Project A: Project will take $260,000 expenditure to start today; generate cash inflows for the next 4 years of $30,000, 100,000, $150,000 and $50,000 with a WACC=10%. Lemon Juice Project B: Project will take $300,000 expenditure to start today; generate cash inflows for the next 4 years of $95,000 per year with a WACC=10%.
2) What decision should you make regarding acceptance or rejection by each individual technique from #1 above (NPV? PBP? IRR? MIRR? Discounted PBP) for each project A and B? Explain the reasoning for each individual decision. Assume managerial criteria of 3.50 for the PBP technique and 3.00 for discounted PBP. Answers are discussion in Word doc only. [10 points]
3) If you had to make a final single decision based on ALL of the techniques together, what is that decision? Explain your reasoning. There is only one correct decision and the reasoning must also accurately represent those explained in the videos and text. Answers are discussion in Word doc only. [4 points]
4) Make a Net Present Value (NPV) Profile for projects A and B (both placed on the same graph) of BOTH the original pricing policy of question #1. Discuss what information this could provide a financial analyst for the firm. Include a discussion on the uncertainty of the discount rate (x-axis) and the crossover rate. Use Excel for this problem. [6 points]
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