FIN 3600 Module 6 Assignment 2: Applying Capital Budgeting Techniques to Analyze Projects Name: For full credit,
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Question:
| FIN 3600 | |||||
| Module 6 Assignment 2: Applying Capital Budgeting Techniques to Analyze Projects | |||||
| Name: | |||||
| For full credit, you must show your work | |||||
| Main Capital Incorporated is considering two mutually exclusive projects. The company's discount rate is 10% and its payback period is 3 years. Using excel, calculate the payback period, NPV and IRR for each project. Determine whether Main Capital should accept or reject the projects under each technique. Explain why. | |||||
| Cash Flows | Project A | Project B | |||
| Initial cash outflow | -400,000 | -600,000 | |||
| The 1 | 55,000 | 300,000 | |||
| The 2 | 55,000 | 300,000 | |||
| The 3 | 55,000 | 50,000 | |||
| The 4 | 225,000 | 50,000 | |||
| The 5 | 225,000 | 49,000 | |||
| Provide answers in the boxes below. Work can be shown in the formula cell or off to the side. | |||||
| Payback Period | |||||
| Accept? | |||||
| Why? | |||||
| NPV | |||||
| Accept? | |||||
| Why? | |||||
| IRR | |||||
| Accept? | |||||
| Why? | |||||
Expert Answer:
To calculate the payback period and NPV for the two projects IA and IB we can use the provided cash ... View the full answer
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