Please do work in EXCEL and show individual cell work.

Gardial Fisheries is considering two mutually exclusive investments. The projects' expected net cash flows are as follows:

Expected Net Cash Flows

Time

Project A

Project B

0

($375)

($575)

1

($300)

$190

2

($200)

$190

3

($100)

$190

4

$600

$190

5

$600

$190

6

$926

$190

7

($200)

$0

a. If each project's cost of capital is 12%, which project should be selected? If the cost of capital is 18%, what project is the proper choice? Provide your answer after you've completed all analyses.

@ 12% cost of capital

@ 18% cost of capital

Use Excel's NPV function as explained in this chapter's Tool Kit. Note that the range does not include the costs, which are added separately.

WACC =

12%

WACC =

18%

NPV _A =

NPV _A =

NPV _B =

NPV _B =

b. What is each project's IRR?

IRR _A =

IRR _B =

c. What is each project's MIRR at a cost of capital of 12%? At r = 18%? Hint: note that B is a 6-year project.

@ 12% cost of capital

@ 18% cost of capital

MIRR _A =

MIRR _A =

MIRR _B =

MIRR _B =

d. What is the regular payback period for these two projects?

Project A

Time period

0

1

2

3

4

5

6

7

Cash flow

(375)

(300)

(200)

(100)

600

$600

$926

($200)

Cumulative cash flow

Intermediate calculation for payback

Payback using intermediate calculations

Project B

Time period

0

1

2

3

4

5

6

7

Cash flow

-$575

$190

$190

$190

$190

$190

$190

$0

Cumulative cash flow

Intermediate calculation for payback

Payback using intermediate calculations

e. At a cost of capital of 12%, what is the discounted payback period for these two projects?

WACC =

12%

Project A

Time period

0

1

2

3

4

5

6

7

Cash flow

-$375

-$300

-$200

-$100

$600

$600

$926

-$200

Disc. cash flow

Disc. cum. cash flow

Intermediate calculation for payback

Payback using intermediate calculations

Project B

Time period

0

1

2

3

4

5

6

7

Cash flow

-$575

$190

$190

$190

$190

$190

$190

Disc. cash flow

Disc. cum. cash flow

Intermediate calculation for payback

Payback using intermediate calculations

h. What is the profitability index for each project if the cost of capital is 12%?

PV of future cash flows for A:

PI of A:

PV of future cash flows for B:

PI of B:

a. If each project's cost of capital is 12%, which project should be selected? If the cost of capital is 18%, what project is the proper choice? Provide your answer after you've completed all analyses.