DUE AFTER 3 HOURS from now

FIN  340   Excel  Assignment  #1  

Submit  by:  5  p.m.  on  10/24/16    

You  may  work  in  groups  of  up  to  3  students  for  this  assignment.  You  may  submit  this  assignment  on   Canvas  or  by  sending  it  to  me  by  email.     You  have  just  been  hired  as  a  financial  analyst  for  a  small  firm  whose  employees  do  not  have  much   experience  with  Excel.  As  your  first  task,  you  have  been  asked  to  develop  a  simple  Excel  spreadsheet   that  your  manager  can  input  values  for  a  project  the  firm  is  considering  to  determine  whether  the   project  is  acceptable.  The  capital  budgeting  techniques  that  the  firm  uses:  Net  Present  Value;  Internal   Rate  of  Return;  Profitability  Index.     The  spreadsheet  should  contain  cells  where  the  manager  can  input  cash  flows  associated  with  the   project,  and  the  project  hurdle  rate  (or  cost  of  capital).  Assume  that  the  longest  project  that  will  be   considered  is  a  ten-­‐year  project.  The  spreadsheet  should  contain  cells  that  calculate  the  NPV,  IRR  and  PI   once  the  inputs  have  been  entered.       Because  this  is  for  a  manager  that  has  not  used  Excel  before,  the  spreadsheet  should  include   instructions  on  how  to  enter  in  the  inputs  (for  example,  should  the  initial  investment  be  entered  in  as  a   negative  or  positive  value).  It  should  also  be  formatted  so  that  the  manager  is  able  to  immediately  see   whether  the  project  is  acceptable  or  not,  without  the  manager  needing  to  know  what  the  criteria  are  for   accept/reject  for  a  particular  technique.  In  other  words,  based  on  the  value  (NPV,  IRR,  etc.)  generated   by  the  project,  there  should  be  a  cell  that  indicates  whether  the  project  should  be  accepted  or  not.   Finally,  the  manager’s  background  is  in  design,  so  he  likes  to  see  documents  that  are  visually  pleasing.  

  This  assignment  is  worth  5  points.  You  have  the  opportunity  to  earn  one  extra  credit  point  if  you  also  set   up  a  calculation  and  provide  the  accept/reject  decision  using  the  payback  period.  To  earn  the  extra   credit  point,  you  will  have  to  use  nested  =IF  statements  to  figure  out  the  payback  period  in  one  cell.  For   your  firm,  the  maximum  acceptable  payback  period  is  4  years.     The  following  Excel  functions  may  come  in  useful:  =NPV,  =IRR,  =IF