Ellis_PA2.docx - Word Table Tools Jordan R Ellis Share File Home Insert Design Layout References Mailings...

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Ellis_PA2.docx - Word Table Tools Jordan R Ellis Share File Home Insert Design Layout References Mailings Review View Help Design Layout Tell me what you want to do Cut Times New R 9 A A Aa A Copy Paste BI Uabe X2 X Aaby A Format Painter Clipboard Font Paragraph 1 Normal 1 No Spac... Heading 1 Heading 2 Title Subtitle Subtle Em... Emphasis Styles AaBbCcDc AaBbCcDc AaBbCc AaBbCct AaB AaBbCct AaBbCcDa AaBbCcDa K Find Replace Select Editing MBA/Z Spring 2023, AFT PRACTICAL APPLICATION Z Page 4 of 7 1882 words where the equations in the cells will provide the required backup. Be sure to clearly indicate the required rate of return for each project (you calculated each in Problem 3). Remember that each capital budgeting method should be calculated and analyzed on a stand-alone basis. Points Year Req. Return (use 2 decimals xx.xx%) Project A Project B Project C Project D 16.55% 13.15% 14.85% 19.10% CF=-$4,000,000 C01 1,000,000, F01=4 CF -$6,000,000 C01 2,000,000 F01=1 C02=800,000 F02=2 C03=300,000 F03=1 I=16.55 624242 4a NPV (to nearest $1) 4b NPV accept/reject 5a IRR (xx.XX%) 5b IRR accept/reject NPV=- $498,321.67| Reject CF=-$3,000,000 C01=300,000 F01=1 C02=500,000 F02=2 C03-750,000 F03=7 I=13.15 C02=1,500,000 F02=1 C03=1,250,000 NPV=$279,856.97 Accept F03=1 C04 1,000,000 F04-2 I=14.85 NPV=-$1,221,120.26 Reject CF=-$4,500,000 C01=2,000,000 F01=2 C02=1,000,000 F02-2 F03=2 I=19.10 NPV=$61,971.04 Accept C03-500,000 6a PI (show 2 decimals, X.XX) 6b PI accept/reject 4 7a Payback Period (x.x years) 2 7b Payback accept/reject If you need more room to show your work, just add space in this document or put at the end (but be sure your + 100% 8:42 PM 2/11/2023 Ellis_PA2.docx - Word Table Tools Jordan R Ellis File Home Insert Design Layout References Mailings Review View Help Design Layout Tell me what you want to do Share Find Cut Times New R 9 A A Aa A AaBbCcDc AaBbCcDc AaBbCc AaBbCct AaB AaBbCct AaBbCcDa AaBbCcDa Copy Replace Paste Format Painter Clipboard BI Uabe X2 X2 Aab A 1 Normal 1 No Spac... Heading 1 Heading 2 Title Subtitle Subtle Em... Emphasis Select Font Paragraph Styles Editing Page 3 of 7 1882 words Use for Problems 4-7. For each project, calculate the NPV, IRR, profitability index (PI) and the payback period. For each capital budgeting decision tool, indicate if the project should be accepted or rejected, assuming that each project is independent of the others. Important Note: The venture capital folks, when considering payback period, have a firm maximum payback period of four years. This 4-year payback period has no impact on other capital budgeting analysis techniques, each is to be considered on its own. In other words, yes, all cash flows need to be considered for NPV, IRR, and PI. Expected cash flows for the four potential projects that Genesis is considering as shown below (each project ends when its cash flows end): Year Project A 0 -$4,000,000 Project B -$3,000,000 Project C -$6,000,000 Project D -$4,500,000 1 $1,000,000 $300,000 $2,000,000 $2,000,000 2 $1,000,000 $500,000 $1,500,000 $2,000,000 3 $1,000,000 $500,000 $1,250,000 $1,000,000 4 $1,000,000 $750,000 5 $800,000 $750,000 6 $0 $750,000 $1,000,000 $1,000,000 $1,000,000 $500,000 $500,000 7 $800,000 $750,000 8 $300,000 $750,000 9 $750,000 10 $750,000 I have provided a suggested template for your final answers. Below the grid is where you should show all your required backup calculations (this means your cash flow register inputs, the interest rate, PI calculation and cumulative cash flows for payback). If you are working this in Excel, feel free to submit your Excel sheet, + 100% 9:09 PM 2/11/2023 Ellis_PA2.docx - Word Table Tools Jordan R Ellis Share File Home Insert Design Layout References Mailings Review View Help Design Layout Tell me what you want to do Cut Times New R 9 A A Aa A Copy Paste BI Uabe X2 X Aaby A Format Painter Clipboard Font Paragraph 1 Normal 1 No Spac... Heading 1 Heading 2 Title Subtitle Subtle Em... Emphasis Styles AaBbCcDc AaBbCcDc AaBbCc AaBbCct AaB AaBbCct AaBbCcDa AaBbCcDa K Find Replace Select Editing MBA/Z Spring 2023, AFT PRACTICAL APPLICATION Z Page 4 of 7 1882 words where the equations in the cells will provide the required backup. Be sure to clearly indicate the required rate of return for each project (you calculated each in Problem 3). Remember that each capital budgeting method should be calculated and analyzed on a stand-alone basis. Points Year Req. Return (use 2 decimals xx.xx%) Project A Project B Project C Project D 16.55% 13.15% 14.85% 19.10% CF=-$4,000,000 C01 1,000,000, F01=4 CF -$6,000,000 C01 2,000,000 F01=1 C02=800,000 F02=2 C03=300,000 F03=1 I=16.55 624242 4a NPV (to nearest $1) 4b NPV accept/reject 5a IRR (xx.XX%) 5b IRR accept/reject NPV=- $498,321.67| Reject CF=-$3,000,000 C01=300,000 F01=1 C02=500,000 F02=2 C03-750,000 F03=7 I=13.15 C02=1,500,000 F02=1 C03=1,250,000 NPV=$279,856.97 Accept F03=1 C04 1,000,000 F04-2 I=14.85 NPV=-$1,221,120.26 Reject CF=-$4,500,000 C01=2,000,000 F01=2 C02=1,000,000 F02-2 F03=2 I=19.10 NPV=$61,971.04 Accept C03-500,000 6a PI (show 2 decimals, X.XX) 6b PI accept/reject 4 7a Payback Period (x.x years) 2 7b Payback accept/reject If you need more room to show your work, just add space in this document or put at the end (but be sure your + 100% 8:42 PM 2/11/2023 Ellis_PA2.docx - Word Table Tools Jordan R Ellis File Home Insert Design Layout References Mailings Review View Help Design Layout Tell me what you want to do Share Find Cut Times New R 9 A A Aa A AaBbCcDc AaBbCcDc AaBbCc AaBbCct AaB AaBbCct AaBbCcDa AaBbCcDa Copy Replace Paste Format Painter Clipboard BI Uabe X2 X2 Aab A 1 Normal 1 No Spac... Heading 1 Heading 2 Title Subtitle Subtle Em... Emphasis Select Font Paragraph Styles Editing Page 3 of 7 1882 words Use for Problems 4-7. For each project, calculate the NPV, IRR, profitability index (PI) and the payback period. For each capital budgeting decision tool, indicate if the project should be accepted or rejected, assuming that each project is independent of the others. Important Note: The venture capital folks, when considering payback period, have a firm maximum payback period of four years. This 4-year payback period has no impact on other capital budgeting analysis techniques, each is to be considered on its own. In other words, yes, all cash flows need to be considered for NPV, IRR, and PI. Expected cash flows for the four potential projects that Genesis is considering as shown below (each project ends when its cash flows end): Year Project A 0 -$4,000,000 Project B -$3,000,000 Project C -$6,000,000 Project D -$4,500,000 1 $1,000,000 $300,000 $2,000,000 $2,000,000 2 $1,000,000 $500,000 $1,500,000 $2,000,000 3 $1,000,000 $500,000 $1,250,000 $1,000,000 4 $1,000,000 $750,000 5 $800,000 $750,000 6 $0 $750,000 $1,000,000 $1,000,000 $1,000,000 $500,000 $500,000 7 $800,000 $750,000 8 $300,000 $750,000 9 $750,000 10 $750,000 I have provided a suggested template for your final answers. Below the grid is where you should show all your required backup calculations (this means your cash flow register inputs, the interest rate, PI calculation and cumulative cash flows for payback). If you are working this in Excel, feel free to submit your Excel sheet, + 100% 9:09 PM 2/11/2023