Question: Please show all work using EXCEL SPREADSHEET and EXCEL FORMULAS USED TO COMPLETE WORK. Perez Company: Mutually Exclusive Projects with Different Lives (10-17) Again, you

Please show all work using EXCEL SPREADSHEET and EXCEL FORMULAS USED TO COMPLETE WORK.

Perez Company: Mutually Exclusive Projects with Different Lives (10-17)

Again, you are considering two mutually exclusive projects.

Machine A: This project costs $10 million. The expected net cash flows are $4 million per year for 4 years, when is to be replaced.

Machine B: It costs $15 million, and has expected cash flows of $3.5 per year for 8 years, when it will be replaced.

The cost of capital is 10%. Machine prices are expected to stay steady as production efficiencies are expected to offset inflation.

Evaluate these projects.

  1. Calculate NPV, IRR, Replacement Chain, and Equivalent Annual Annuity.
  2. Which project should be company accept?

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