Purpose of Assignment
The purpose of this assignment is to allow the students to become familiar with and practice the measurement of Net Present Value (NPV), payback, and Weighted Average Cost of Capital (WACC) using Microsoft® Excel®.
Assignment Steps
Resources: Microsoft® Excel®, Capital Budgeting Decision Models Template
Calculate the following problems using Microsoft® Excel®:
Project A | Project B | Project C | Project D | |
Inital Outlay | (105,000.000) | (99,000.00) | (110,000.00) | (85,000.00) |
Inflow year 1 | 53,000.00 | 51,000.00 | 25,000.00 | 45,000.00 |
Inflow year 2 | 50,000.00 | 47,000.00 | 55,000.00 | 50,000.00 |
Inflow year 3 | 48,000.00 | 41,000.00 | 15,000.00 | 30,000.00 |
Inflow year 4 | 30,000.00 | 52,000.00 | 21,000.00 | 62,000.00 |
Inflow year 5 | 35,000.00 | 40,000.00 | 35,000.00 | 68,000.00 |
Rate | 7% | 10% | 13% | 18% |
Project D | Project E | Project F | |
Cost | 205,000.00 | 179,000.00 | 110,000.00 |
Inflow year 1 | 53,000.00 | 51,000.00 | 25,000.00 |
Inflow year 2 | 50,000.00 | 87,000.00 | 55,000.00 |
Inflow year 3 | 48,000.00 | 41,000.00 | 21,000.00 |
Inflow year 4 | 30,000.00 | 52,000.00 | 9,000.00 |
Inflow year 5 | 24,000.00 | 40,000.00 | 35,000.00 |
Component | Balance Sheet Value | Market Value | Cost of Capital |
Debt | 5,000,000.00 | 6,850,000.00 | 8% |
Preferred Stock | 4,000,000.00 | 2,200,00.00 | 10% |
Common Stock | 2,000,000.00 | 5,600,000.00 | 13% |
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