Finance
luco.b
aiu_fina_310_week_10_in_class_activity.xlsxSheet1
| In-Class Activities | ||||
| Instructions: | ||||
| You are expected to calculate the net present value (NPV), internal rate of return (IRR), | ||||
| modified internal rate of return (MIRR), payback period, discounted payback, and profitability | ||||
| inde (PI) for each of the possible projects. Not only should you perform each capital budgeting | ||||
| analysis for each project and record the results in the "green cells", you should identify | ||||
| which project should be implemented and explain why your rationale. | ||||
| This needs to be uploaded in the course shell under the assignment tab. The name of this | ||||
| assignment is "In class activity spreadsheet". This MUST be uploaded no later than 12:40 p.m. (CDT). | ||||
| Problem: | ||||
| Quark Industries has four potential projects, all with an initial cash flow of $2,000,000.00. | ||||
| The capital budget for the year will allow Quark to accept one of the four projects. Given | ||||
| the discount rates and the future cash flow for each project, determine which project | ||||
| Quark should accept. | ||||
| Cash Flows | Project M | Project N | Project O | Project P |
| Year 0 | ($2,000,000) | ($2,000,000) | ($2,000,000) | ($2,000,000) |
| Year 1 | $500,000 | $600,000 | $1,000,000 | $300,000 |
| Year 2 | $500,000 | $600,000 | $800,000 | $500,000 |
| Year 3 | $500,000 | $600,000 | $600,000 | $700,000 |
| Year 4 | $500,000 | $600,000 | $400,000 | $900,000 |
| Year 5 | $500,000 | $600,000 | $200,000 | $1,100,000 |
| Discount Rate | 6% | 9% | 15% | 22% |
| NPV | ||||
| IRR | ||||
| MIRR | ||||
| Payback Period | ||||
| Discounted Payback | ||||
| PI | ||||
You should look at the Chapter 9 spreadsheet located under the "Learning Materials" section of the course shell for how to conduct each form of capital analysis (NPV, IRR, MIRR, Payback, Discounted Payback, and PI).
