FIN 419 Week 4 Capital Budgeting Decision Models

FIN 419 Week 4 Capital Budgeting Decision Models

Entire Course Link

https://zh.scribd.com/document/340327850/Uop-Tutorial

 

 FIN 419 Week 4 Capital Budgeting Decision Models
 

Purpose of Assignment 

The purpose of this assignment is to allow the students to become familiar with and practice the measurement of Net Present Value (NPV), payback, and Weighted Average Cost of Capital (WACC) using Microsoft® Excel®. 

Assignment Steps 

Resources: Microsoft® Excel®, Capital Budgeting Decision Models Template 

Calculate the following problems using Microsoft® Excel®:

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Project A
Project B
Project C
Project D
Inital Outlay
(105,000.000)
(99,000.00)
(110,000.00)
(85,000.00)
Inflow year 1
53,000.00
51,000.00
25,000.00
45,000.00
Inflow year 2
50,000.00
47,000.00
55,000.00
50,000.00
Inflow year 3
48,000.00
41,000.00
15,000.00
30,000.00
Inflow year 4
30,000.00
52,000.00
21,000.00
62,000.00
Inflow year 5
35,000.00
40,000.00
35,000.00
68,000.00
Rate
7%
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 D
Project E
Project F
Cost
205,000.00
179,000.00
110,000.00
Inflow year 1
53,000.00
51,000.00
25,000.00
Inflow year 2
50,000.00
87,000.00
55,000.00
Inflow year 3
48,000.00
41,000.00
21,000.00
Inflow year 4
30,000.00
52,000.00
9,000.00
Inflow year 5
24,000.00
40,000.00
35,000.00
 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Component
Balance Sheet Value
Market Value
Cost of Capital
Debt
5,000,000.00
6,850,000.00
8%
Preferred Stock
4,000,000.00
2,200,00.00
10%
Common Stock
2,000,000.00
5,600,000.00
13%
 

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