The CFO has tasked you with providing the board at least 3 pricing options The estimated life of the SIS is 15 years after which point the program will need to be replaced You are to make a recommendation for the most economical option based on NPV and IRR As part of your presentation, you will need to present these for all three options Option 1 has an initial cost of $1 75 million ($1,750,000) and annually saves the college $250,000 in other expenses Option 2 has an initial cost of $2 5 million and annually saves the college $325,000 in other expenses Option 3 has an initial cost of $2 75 million and annually saves the college $350,000 in other expenses To determine the NPV and minimum IRR that is acceptable, the WACC must be computed The CFO has told you that the colleges long term financing is 30 debt with an after tax yield of 8 , the remaining long term funding is fund capital (equity) on which the Board requires a 10 return Use Microsoft Excel to determine the WACC, NPV, and IRR for each option Identify the best option for the scenario Show all math using the Excel formula functions

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The CFO has tasked you with providing the board at least 3 pricing options. The estimated life of the SIS is 15 years after which

The CFO has tasked you with providing the board at least 3 pricing options. The estimated life of the SIS is 15 years after which point the program will need to be replaced. You are to make a recommendation for the most economical option based on NPV and IRR. As part of your presentation, you will need to present these for all three options.

Option 1 has an initial cost of $1.75 million ($1,750,000) and annually saves the college $250,000 in other expenses.
Option 2 has an initial cost of $2.5 million and annually saves the college $325,000 in other expenses.
Option 3 has an initial cost of $2.75 million and annually saves the college $350,000 in other expenses.

To determine the NPV and minimum IRR that is acceptable, the WACC must be computed. The CFO has told you that the colleges long-term financing is 30% debt with an after tax yield of 8%, the remaining long-term funding is fund capital (equity) on which the Board requires a 10% return.

Use Microsoft Excel to determine the WACC, NPV, and IRR for each option. Identify the best option for the scenario. Show all math using the Excel formula functions.