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Spreadsheet Problem

i need to solve problem attached in spreetshets 

Book Title: eTextbook: Corporate Finance: A Focused Approach
Chapter 10. The Basics of Capital Budgeting: Evaluating Cash Flows
Spreadsheet Problem

(10-23)

Spreadsheet Problem

Build a Model: Capital Budgeting Tools

Resource

 

Start with the partial model in the file Ch10 P23 Build a Model.xlsx on the

textbook’s Web site. Gardial Fisheries is considering two mutually

exclusive investments. The projects’ expected net cash flows are as follows:

447

a. If each project’s cost of capital is 12%, which project should be selected? If

the cost of capital is 18%, what project is the proper choice?

  Expected Net Cash Flows

Year Project A Project B

0 −$375 −$575

1 −300 190

2 −200 190

3 −100 190

4 600 190

5 600 190

6 926 190

7 −200 0

b. Construct NPV profiles for Projects A and B.

c. What is each project’s IRR?

d. What is the crossover rate, and what is its significance?

e. What is each project’s MIRR at a cost of capital of 12%? At r = 18%? (Hint:

Consider Period 7 as the end of Project B’s life.)

f. What is the regular payback period for these two projects?

g. At a cost of capital of 12%, what is the discounted payback period for these

two projects?

h. What is the profitability index for each project if the cost of capital is 12%?

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