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You have the following projects available. Please fill in the missing space. You

ID: 2707363 • Letter: Y

Question

You have the following projects available. Please fill in the missing space. You can copy and paste the table onto a spreadsheet in Excel, and use Excel functions to solve the problem.

Project Cash Flows

Time Period

A

B

0

-$11,000

-$500,000

1

$7,000

$60,000

2

-$1,500

$90,000

3

$2,300

$170,000

4

$1,000

$230,000

5

$1,000

$205,000

6

-$300

$140,000

7

-$300

$110,000

8

-$300

$70,000

9

$400

$80,000

10

$400

Discount Rate

7.50%

8.00%

Payback Period

Discounted Payback

Profitability Index

NPV

IRR

  

     

Project Cash Flows

     

Time Period

     

A

     

B

     

0

     

-$11,000

     

-$500,000

     

1

     

$7,000

     

$60,000

     

2

     

-$1,500

     

$90,000

     

3

     

$2,300

     

$170,000

     

4

     

$1,000

     

$230,000

     

5

     

$1,000

     

$205,000

     

6

     

-$300

     

$140,000

     

7

     

-$300

     

$110,000

     

8

     

-$300

     

$70,000

     

9

     

$400

     

$80,000

     

10

     

$400

     

     

     

     

     

Discount Rate

     

7.50%

     

8.00%

     

Payback Period

     

     

     

Discounted Payback

     

     

     

Profitability Index

     

     

     

NPV

     

     

     

IRR

     

     

  

Explanation / Answer


Project A Project Cash Flows P.V. Factor P.V. of Cash flows Time Period A 0 -11000 1 -11000 1 7000 0.930232558 6511.627907 2 -1500 0.865332612 -1297.998918 3 2300 0.80496057 1851.40931 4 1000 0.74880053 748.8005298 5 1000 0.696558632 696.5586324 6 -300 0.647961518 -194.3884555 7 -300 0.602754901 -180.8264703 8 -300 0.560702233 -168.21067 9 400 0.521583473 208.6333892 10 400 0.485193928 194.0775713 Discount Rate 0.075 Payback Period N.A. Discounted Payback N.A. Profitability Index -0.76 NPV -2630.32 IRR -5.27% Note: Payback and discounted payback cannot be calculated as neither the cash flow, nor the P.V. of cash flow are recovered during the life of project