Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Resources: Microsoft Excel , Capital Budgeting Decision Models Template Calculate the following problems using Microsoft Excel : Calculate the NPV for each project and determine

Resources:MicrosoftExcel, Capital Budgeting Decision Models Template

Calculatethe following problems using MicrosoftExcel:

  • Calculate the NPV for each project and determine which project should be accepted.

Project AProject BProject CProject DInital Outlay(105,000.000)(99,000.00)(110,000.00)(85,000.00)Inflow year 153,000.0051,000.0025,000.0045,000.00Inflow year 250,000.0047,000.0055,000.0050,000.00Inflow year 348,000.0041,000.0015,000.0030,000.00Inflow year 430,000.0052,000.0021,000.0062,000.00Inflow year 535,000.0040,000.0035,000.0068,000.00Rate7%10%13%18%

  • Your company is considering three independent projects. Given the following cash flow information, calculate the payback period for each. If your company requires a three-year payback before an investment can be accepted, which project(s) would be accepted?

Project DProject EProject FCost205,000.00179,000.00110,000.00Inflow year 153,000.0051,000.0025,000.00Inflow year 250,000.0087,000.0055,000.00Inflow year 348,000.0041,000.0021,000.00Inflow year 430,000.0052,000.009,000.00Inflow year 524,000.0040,000.0035,000.00

  • Using market value and book value (separately), find the adjusted WACC, using 30% tax rate.

ComponentBalance Sheet ValueMarket ValueCost of CapitalDebt5,000,000.006,850,000.008%Preferred Stock4,000,000.002,200,00.0010%Common Stock2,000,000.005,600,000.0013%

Clickthe Assignment Files tab to submit your assignment.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduces Quantitative Finance

Authors: Paul Wilmott

2nd edition

470319585, 470319581, 978-0470319581

More Books

Students also viewed these Finance questions