Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Write =IF() statements to give your decision to accept or reject the project under each criteria and give the Final overall decision under each scenario

  • Write =IF() statements to give your decision to accept or reject the project under each criteria and give the Final overall decision under each scenario (of WACC) considering all above six options
  • calculate the crossover rate for the two NPV profiles
  • Calculate the NPV profiles for the two alternatives by assuming a range of WACC starting with 0% and going up to 25% (increments of 5%)
  • Make one graph of these two NPV profiles. Label your graph with a title, X and Y axis, IRR, and cross over rate (clearly marked and shown) If you cannot complete all bullets that is okay! Thank you in advance. Please see info below for reference.
  • Year Cash Flows
    Alternative 1 Alternative 2
    0 ($50,000) ($400,000)
    1 $15,500 $51,300
    2 $20,100 $155,000
    3 $18,900 $127,800
    4 $17,100 $126,900
    5 $13,700 $125,100
  • At 10% WACC
    Alternative 1 Alternative 2
    Payback Period 2.76190 3.51931
    Discounted Payback Period 3.43646 4.54806
    NPV $15,088.48 $35,105.23
    IRR 21.44% 13.10%
    MIRR 15.96% 11.87%
    Profitability Index $1.30 $1.09
    At 13% WACC
    Alternative 1 Alternative 2
    Payback Period 2.76190 3.51931
    Discounted Payback Period 3.70971 4.98399
    NPV $10,480.27 $1,087.19
    IRR 21.44% 13.10%
    MIRR 17.38% 13.06%
    Profitability Index $1.21 $1.00
    At 15% WACC
    Alternative 1 Alternative 2
    Payback Period 2.76190 3.51931
    Discounted Payback Period 3.90991 5.31201
    NPV $7,692.11 ($19,406.16)
    IRR 21.44% 13.10%
    MIRR 18.34% 13.86%
    Profitability Index $ 1.15 $0.95

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

Finance

Authors: Ehsan Nikbakht, A A Groppelli

6th Edition

0764147595, 9780764147593

More Books

Students also viewed these Finance questions

Question

Prove that a direct product of abelian groups is abelian.

Answered: 1 week ago

Question

2. To store it and

Answered: 1 week ago