Chapter_05_HW - Annual cash flows: Fishing Submarine Year 0...

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Chapter 5 Problems 3, 5, 8, 11, 14 Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green NOTE: Some functions used in these spreadsheets may require that the "Analysis ToolPak" or "Solver Add-in" be installed in Excel. To install these, click on "Tools|Add-Ins" and select "Analysis ToolPak and "Solver Add-In."
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Chapter 5 Question 3 Input area: Annual cash inflows: Year 1 Year 2 Year 3 Year 4 Discount rate Initial cost . Output area: Discounted payments: Year 1 $- Year 2 $- Year 3 $- Year 4 $- Payback period -
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Chapter 5 Question 5 Input area: Required Return Annual cash flows: Year 0 Year 1 Year 2 Year 3 . Output area: IRR Err:523 Accept/Reject Err:523
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Chapter 5 Question 8 Input area: Project Alpha Project Beta Year 0 Year 1 Year 2 Year 3 Discount rate . Output area: PI for Alpha #DIV/0! PI for Beta #DIV/0! #DIV/0! since it has a larger profitability index. However, remember the profitability index can lead to incorrect decisions when evaluating mutually exclusive projects.
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Chapter 5 Question 11 Input area:
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Unformatted text preview: Annual cash flows: Fishing Submarine Year 0 ($750,000) $(2,100,000) Year 1 $310,000 $1,200,000 Year 2 $430,000 $760,000 Year 3 $330,000 $850,000 Discount rate 14% Output area: a) IRR (Fishing) 19.83% IRR (Submarine) 17.36% b) Incremental CF Year 0 $(1,350,000) Year 1 $890,000 Year 2 $330,000 Year 3 $520,000 Incremental IRR 15.78% c) NPV (Fishing) $320,000.00 NPV (Submarine) $710,000.00 Chapter 5 Question 14 Input area: Annual cash flows: Board Game CD-ROM Year 0 Year 1 Year 2 Year 3 Required return Output area: a. Payback (Board game) 0.00 Payback (CD-ROM) 0.00 Payback criterion implies accept CD-ROM because it pays back sooner. b. NPV (Board game) $- NPV (CD-ROM) $- NPV criterion implies accept CD-ROM because it has a higher NPV. c. IRR (Board game) Err:523 IRR (CD-ROM) Err:523 IRR decision rule implies accept Err:523 because its IRR is greater. d. Year Incremental CF $- 1 $- 2 $- 3 $- Incremental IRR Err:523 Err:523...
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This note was uploaded on 08/30/2010 for the course MANAGEMENT 3467783 taught by Professor Langly during the Summer '10 term at University of Phoenix.

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Chapter_05_HW - Annual cash flows: Fishing Submarine Year 0...

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