1. Assume that the cost of capital (discount rate) for the question that follows is equal to 0.03 (this is a decimal, not a percentage).

Enter the cost of capital as a decimal in the space below.

2. Consider the following capital budgeting project.

You are considering investing in a business that will cost $200,000 and will create free cash flows at the rate of $30,000 per year for the next 10 years. Your cost of capital was given in the first question. Use that cost of capital in this question.

Within Excel, compute the following and attach your file to this post.

• What is the payback of the project? If you require a payback under 7 years, do you accept or reject the project?
• What is the discounted payback of the project? If you require a discounted payback under 7 years, do you accept or reject the project?
• What is the internal rate of return of the project? Do you accept or reject the project given your cost of capital?
• What is the MIRR of the project? Do you accept or reject the project given your cost of capital?
• What is the NPV of the project? Do you accept or reject the project?

Within the Excel spreadsheet, create an NPV profile of the project using interest rates from 0 to 20% at increments of 1%.Please make it under excel with formular