Time Value of Money Calculations

profileAndreChausse

The IT department has requested an update in its server population. This upgrade is required to maintain a competitive position. The CEO has asked that you evaluate the project and submit a recommendation to her, in terms of whether the company should move forward with this request. The calculated value of the project is a reduction of expenses, including power and replacement costs, as shown in Table-1:

 


Year

Decrease in Expenses

1$30,000.00
2$100,000.00
3$120,000.00
4$100,000.00
5$30,000.00

 

Assume the impact after five years to be immeasurable.  The cost of capital to the firm is currently 8% and the cost of the project today is $286,000.
Required:

  • Calculate the net present value of the project
  • Calculate the internal rate of return
  • Calculate the payback period
  • Calculate the discounted payback period

Submit an Excel file with your calculations, and a 2-to-5-page paper that explains the calculations and provides your final assessment and decision. Justify your recommendations. The paper must be submitted as a Word document and it must follow APA style guidelines.

    • 5 years ago
    • 20
    Answer(2)

    Purchase the answer to view it

    blurred-text
    NOT RATED
    • attachment
      time_value_of_money_calculations.xlsx
    • attachment
      time_value_of_money_explanation.docx

    Purchase the answer to view it

    blurred-text
    NOT RATED
    • attachment
      calculations.xlsx
    • attachment
      time_value_of_money_calculations.docx
    Bids(1)