FIN419_r6_wk4_Capital_Budgeting_Decision_Models_Template (1) 9102019.xlsx - Instructions 1 You have three problems one on each tab of this Excel file 2

# FIN419_r6_wk4_Capital_Budgeting_Decision_Models_Template (1) 9102019.xlsx

• 9

This preview shows page 1 - 9 out of 9 pages.

Instructions 1. You have three problems - one on each tab of this Excel file. 2. Please show your work in the cells. Use Excel formulas instead of writing the values/answers directly in The instructor will then know where you made a mistake and provide you valuable feedback and partia 3. It is recommended to watch the assigned videos in week # 4. Total Points: 10

Subscribe to view the full document.

n the cell. al credit (if appropriate).
Calculate the NPV for each project and determine which project should be accepted. Project A Project B Initial Outlay (105,000.00) (99,000.00) Inflow year 1 53,000.00 51,000.00 Inflow year 2 50,000.00 47,000.00 Inflow year 3 48,000.00 41,000.00 Inflow year 4 30,000.00 52,000.00 Inflow year 5 35,000.00 40,000.00 Rate 7% 10% NPV = \$75,228.32 \$77,364.07 #VALUE! #VALUE! Answer: B should be selected among all 4 projects. Project C should be rejected on absolute basis as NPV <0. Project B is prfeered over A a

Subscribe to view the full document.

Project C Project D (110,000.00) (85,000.00) 25,000.00 45,000.00 55,000.00 50,000.00 15,000.00 30,000.00 7.00 62,000.00 35,000.00 68,000.00 13% 18% -\$2,531.00 \$69,006.08 and D as it has the higher NPV
Your company is considering three independent projects. Given the following cash flo If your company requires a three-year payback before an investment can be accepted, Project D Project E Cost 205,000.00 179,000.00 Inflow year 1

Subscribe to view the full document.

Subscribe to view the full document.

Unformatted text preview: 53,000.00 51,000.00 Inflow year 2 50,000.00 87,000.00 Inflow year 3 48,000.00 41,000.00 Inflow year 4 30,000.00 52,000.00 Inflow year 5 24,000.00 40,000.00 Payback Period 5 years 3 years Answer: project e is the best option Calculations Year 1 \$152,000.00 Year 2 \$102,000.00 Year 3 \$54,000.00 Year 4 \$24,000.00 Year 5 \$0.00 Formulas Year 1 b5-b6 c5-c6 Year 2 b19-b7 c19-c7 Year 3 b20-b8 c20-c8 Year 4 b21-b9 c21-c9 Year 5 b22-b10 c22-c10 ow information, calculate the payback period for each. , which project(s) would be accepted? Project F 110,000.00 25,000.00 55,000.00 21,000.00 9,000.00 35,000.00 4 years n \$128,000.00 \$41,000.00 \$0.00-\$52,000.00-\$92,000.00 d5-d6 ### d19-d7 d20-d8 d21-d9 d22-d10 Using market value and book value (separately), find the adjusted WACC, using 3 Component Balance Sheet Value Market Value Debt 5,000,000.00 6,850,000.00 Preferred Stock 4,000,000.00 2,200,000.00 Common Stock 2,000,000.00 5,600,000.00 \$11,000,000.00 \$14,650,000.00 \$11,000,000.00 \$14,650,000.00 Book Value Weights Debt 45.45% Preferred Stock 36.36% Common Stock 18.18% 30% tax rate. Cost of Capital TAX 8% 30% 10% 13% Market Value Weights Debt 46.76% Market Value Preferred Stock 15.02% Book Value Common Stock 38.23% ANSWER Adjusted WACC 10.21% 9.64%...
View Full Document

• Fall '18
• jane Smith

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern