Hi Tutors,

I need some help solving two problems

Problem 1

Bridgewater Fountains is considering expanding its current line of business and has developed the following expected cash flows for the project. Should this project be accepted if the required return is 9.6 percent? Why or why not?

Year Cash Flow

0 -$487,900

1 187,200

2 229,900

3 -27,300

4 246,800

Problem 2

The World Transport Co. is considering two proposals for new software designed to improve the efficiency of their routing system.If the required return is 10 percent, what do you recommend?Why?

YearProject A Cash FlowProject B Cash Flow

0-$72,000-$64,000

1$28,000$26,000

2$32,500$30,000

3$31,000$25,000

Instructions

1. You must calculate NPV and IRR for each problem, using the NPV and IRR functions in the Excel spreadsheet program.
2. Provide a basic description of the answers for each problem. You may type them on the Excel sheet.