File Home Insert Page Layout Formulas Data Review View Conn

File Home Insert Page Layout Formulas Data Review View ?! Connections Clear Reapply /Advanced ?? A Z Z ZA L Properties From From From From Other Existing Refresh Access web Text Sources- Connections Al- Sort Filter Text to RemoveData Consolidate What-If 99 Edit Links Columns Duplicates Validation? Analysis ? Get External Data Connections Sort & Filter Data Tools FIN419 r6 wk4 Capital Budgeting Decision Models Template (7).xlsx 1 Calculate the NPV for each project and determine which project should be accepted. 2 4 CFi CF2 CFn accept if NPV 0reject if NPV 0 10 Project A Project B Project C Project D 12 13 14 15 16 17 18 19 Initial Outlay Inflow year 1 Inflow year 2 Inflow year 3 Inflow year 4 Inflow year5 Rate NPV- (105,000.00) 53,000.00 50,000.00 48,000.00 30,000.00 35,000.00 (99,000.00) 51,000.00 47,000.00 41,000.00 52,000.00 40.000.00 (110,000.00) 25,000.00 55,000.00 15,000.00 21,000.00 35,000.00 (85,000.00) 45,000.00 50,000.00 30,000.00 62,000.00 68,000.00 790 10% 13% 18%

Solution

A:

NPV = 75,228.32 so accept

Project B:

NPV = 77,364.07, so accept

Project C:

NPV = -2,531.00 so reject

Project D:

NPV = 69,006.08 so accept

Discount rate	7.0000%
Cash flows	Year	Discounted CF= cash flows/(1+rate)^year	Cumulative cash flow
(105,000.00)	0	(105,000.00)	(105,000.00)
53,000.000	1	49,532.71	(55,467.29)
50,000.000	2	43,671.94	(11,795.35)
48,000.000	3	39,182.30	27,386.94
30,000.000	4	22,886.86	50,273.80
35,000.000	5	24,954.52	75,228.32