Discuss the below:
Q: Calculate the following problems using Microsoft's Excels:
Calculate the NPV (or each project and determine which project should be accepted.
|
|
Project A
|
Project B
|
Project C
|
Project 13
|
|
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
|
40.00000
|
35.000.00
|
68.000.00
|
|
Rate
|
8%
|
11%
|
15%
|
17%
|
Your company is considering three independent projects. Given the (Slowing 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
|
181,000.00
|
231,000.00
|
110,000.00
|
|
Inflow year 1
|
53,000.00
|
51,000.00
|
28,000.00
|
|
Inflow year 2
|
50,000.00
|
87,000.00
|
58,000.00
|
|
Inflow year 3
|
48,000.00
|
41,000.00
|
24,000.00
|
|
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 35% tax rate.
|
Component
|
Balance Sheet Value
|
Market Value
|
Cost of Capital
|
|
Debt
|
5,000,000.00
|
6,850,000.00
|
9%
|
|
Preferred Stock
|
4,000,000.00
|
2,200,00.00
|
11%
|
|
Common Stock
|
2,000,000.00
|
5,600,000.00
|
13%
|