assign4.xls - FIN 500 Assignment 4(individual work Total...

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FIN 500 Assignment 4 (individual work), Total point This assignment provides you an opportunity to practice estimating cash budgeting projects (chapter 12), using the common approaches in capita (chapter 13) such as payback, internal rate of return and net present valu project , using Excel functions such as irr() and npv() to calculate IRR a complete this assignment, students need to get familiar with course con and chapter 13. Problems in this assignment are chosen from Harvard Business School’ Capital Project and are revised by the instructor. This assignment shou individual work. Your completed Assignment 4 should be saved and su Excel workbook file, i.e., .xls file. The filename should begin assign 4, t and first letter of your first name . For example, if Allen Smith complete he should name this assignment as assign4SmithA, save and submit it a workbook file (.xls file). 10% of this assignment points will be deduc formatted as required. There are three problems in this assignment , each problem is in a w several questions. 1. Growth Enterprise , Inc. (GEI) has $40 million that it can invest capital investment projects (A, B, C, D), which have cash flows following table. Table 1. Comparison of Project Cash Flows ($ thousand dollars) Project Type of cash flow Year 0 Year 1 Year 2 A. Investment -$10,000 0 0 Revenue 0 $21,000 0 Operating expense 0 $11,000 0 B. Investment -$10,000 0 0 Revenue 0 $15,000 $17,000 Operating 0 $5,833 $7,833
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Project A Particulars 0 1 Initial Investment -10,000.00 Revenue 21,000.00 Expenses 11,000.00 Less: Depreciation 10,000.00 Profit Before tax 0.00 Less: tax @40% 0.00 Profit After Tax 0.00 Operating expense 0 $5,833 $7,833 C. Investment -$10,000 0 0 Revenue 0 $10,000 $11,000 Operating expense 0 $5,555 $4,889 D. Investment -$10,000 0 0 Revenue 0 $30,000 $10,000 Operating expense 0 $15,555 $5,555 All revenues and operating expenses can be considered cash items. Each of these projects is considered to be of equivalent risk. The investm to zero on a straight-line basis for tax purpose. For simplicity, the depr 1-a) . Calculate Payback of each project and rank the four projects in orde based on payback approach ( 1 point ).
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