Question: Use Excel spreadsheets to solve this problem. Use cell references and your own formulas. Your firm's SVP of Finance asked you to evaluate an investment
Use Excel spreadsheets to solve this problem. Use cell references and your own formulas. Your firm's SVP of Finance asked you to evaluate an investment opportunity that the development team proposed. Here are some pro-forma financial forecasts for the investment opportunity: (in S) This project is expected to produce cash flows indefinitely, and growth of 5% is expected for all numbers after year 5. (Note: if the level of net working capital is growing at a rate of 5%, then the changes in net working capital will also be growing at a rate of 5%.) Question 1: What are the corresponding UFCF forecasts? The SVP thinks that a discount rate of 10.8244% is appropriate for this project's cash flows (UFCF). Question 2: Make a recommendation about this project: Is it a good idea? Explain carefully, and include all information the SVP will likely want to see. Show your work! Use Excel spreadsheets to solve this problem. Use cell references and your own formulas. Your firm's SVP of Finance asked you to evaluate an investment opportunity that the development team proposed. Here are some pro-forma financial forecasts for the investment opportunity: (in S) This project is expected to produce cash flows indefinitely, and growth of 5% is expected for all numbers after year 5. (Note: if the level of net working capital is growing at a rate of 5%, then the changes in net working capital will also be growing at a rate of 5%.) Question 1: What are the corresponding UFCF forecasts? The SVP thinks that a discount rate of 10.8244% is appropriate for this project's cash flows (UFCF). Question 2: Make a recommendation about this project: Is it a good idea? Explain carefully, and include all information the SVP will likely want to see. Show your work
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