CHAPTER 7: PROBLEM 1b              
               
 Project AProject B            
Discount Rate15%15%            
Year 0($14,500)($9,800)            
Year 1$8,500$4,700            
Year 2$6,800$4,200            
Year 3$2,800$4,100            
NPV =#NAME?#NAME?(Note: You will choose the project that has the highest NPV since it creates the most wealth)   
               
               
CHAPTER 7: PROBLEM 2              
               
YearA.B.C.           
0$3,200$4,600$7,900           
1$825$825$825           
2$825$825$825           
3$825$825$825           
4$825$825$825           
5$825$825$825           
6$825$825$825           
7$825$825$825           
8$825$825$825           
Payback Period =#NAME?#NAME?#NAME?           
               
               
CHAPTER 7: PROBLEM 8              
               
YearProject AProject B            
0($5,200)($3,600)            
11,8001,300            
23,2002,100            
32,2001,800            
IRR =#NAME?#NAME?            
               
               
CHAPTER 7: PROBLEM 9              
               
Discount Rate15%             
Year              
0 (Initial Cost)($185,000)$185,000            
162,000             
262,000             
362,000             
462,000             
562,000             
662,000             
762,000             
First find the NPV#NAME?(Use the built-in NPV formula in Excel but exclude using the Year 0 cash outflow)      
Now calculate the Profitability Index#NAME?(Use the positive amount of the initial cost in cell C44 in the formula. You would only accept the project if the Profitability Index is above 1) 
               
               
CHAPTER 8: PROBLEM 1              
               
Cost of Souffle Maker$27,000($27,000)            
Economic Life6years            
# of Souffles produced per year2,300             
Cost to make each Souffle$2             
Price of each Souffle$7             
Discount Rate14%             
Tax Rate34%             
               
Step 1: First calculate the Operating Cash Flow#NAME?             
               
Step 2: Place the answer you get for your Operating Cash Flow in the year 1 thru year 6 cells below           
Year 1#NAME?             
Year 2#NAME?             
Year 3#NAME?             
Year 4#NAME?             
Year 5#NAME?             
Year 6#NAME?             
               
Step 3: Now find the NPV. Be sure to include the initial cost by using cell C58 as it is negative            
NPV =#NAME?(You will accept the project if the NPV is positive)        
               
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