NPV Calculations Output You are a program manager for the procurement function of a global company....

   

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NPV Calculations Output You are a program manager for the procurement function of a global company. You are building a case for a new training program that will net financial benefits as well as improve departmental morale. Cash flows include: inflow in years 2020, 2021, 2023, 2025, 2027, 2028, and 2030 of $15k, $19k, $38k, $190k, $507k, $1.45M, and $5.29M respectively; initial outflow of $2M at the beginning of 2018 followed by $450k in 2022, $130k in 2026, and $90k in 2029. The hurdle rate is 9% and inflation is expected to average 2.25% per year. Ignoring competing projects, should this project be funded? Hurdle Rate/ROI/IRR: Estimated inflation: Year A 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Total Inflow B Outflow Net Flow с (B-C) Discount Factor 1/(1+k+ p)t 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 NPV D* E '' 1 You subsequently argue that turnover reduction has not been accounted for. Your Director agrees and includes a $25k/yr savings beginning in 2019. Should this project now be funded? Hurdle Rate/ROI/IRR: Estimated inflation: Year A 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Total Inflow B Savings B.1 Outflow с Net Flow (B + B.1-C) 1 I 1 Discount Factor 1/(1+k+p)t 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 NPV D* E 1 1 L I NPV Calculations Output You are a program manager for the procurement function of a global company. You are building a case for a new training program that will net financial benefits as well as improve departmental morale. Cash flows include: inflow in years 2020, 2021, 2023, 2025, 2027, 2028, and 2030 of $15k, $19k, $38k, $190k, $507k, $1.45M, and $5.29M respectively; initial outflow of $2M at the beginning of 2018 followed by $450k in 2022, $130k in 2026, and $90k in 2029. The hurdle rate is 9% and inflation is expected to average 2.25% per year. Ignoring competing projects, should this project be funded? Hurdle Rate/ROI/IRR: Estimated inflation: Year A 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Total Inflow B Outflow Net Flow с (B-C) Discount Factor 1/(1+k+ p)t 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 NPV D* E '' 1 You subsequently argue that turnover reduction has not been accounted for. Your Director agrees and includes a $25k/yr savings beginning in 2019. Should this project now be funded? Hurdle Rate/ROI/IRR: Estimated inflation: Year A 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Total Inflow B Savings B.1 Outflow с Net Flow (B + B.1-C) 1 I 1 Discount Factor 1/(1+k+p)t 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 NPV D* E 1 1 L I

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First cost of capital is calculated based on given Hurdle rate exp... View the full answer