Below is an example of a simple capital project analysis using Excel. Place your cursor on a cell to see the formulas and functions I used in Excel.

13%	Required rate of return
Year	Project A	Cumulative		Project B	Cumulative
0	$                       (300,000)			$                          (40,000)
1	$                         100,000	$ (200,000)		$                            20,300	$   (19,700)
2	$                           47,000	$ (153,000)		$                            15,200	$      (4,500)
3	$                           62,000	$    (91,000)		$                            14,100
4	$                         300,000			$                            11,200
	0.30			0.32
Payback	3.30			2.32
PV	$352,268			$46,510
NPV	$52,268			$6,510
IRR	19.51%			21.51%
PI	1.17			1.16
SUMMARY	PROJECT A			PROJECT B
Payback	3.30 years			2.32 years
NPV	$52,268			$6,510
IRR	19.51%			21.51%
PI	1.17			1.16

 

 

Notice the summary of the results at the bottom?

1. Based on this, which project would you choose, and why? 

2. Do any of the calculations give you conflicting results?