You are considering the following two projects for investment: Project A Project B Year 0 ($10000) ($5000) Year 1 $3000 $3000 Year 2 $7000 $4000 Year 3 $9000 $5000 You must conduct an analysis using your knowledge of capital budgeting (NPV, IRR ect, ) and time value of money to decide which of the options is better. All analysis must be done in Excel. (This will require all calculations to be done using cell references and excel functions). Your analysis will require you to: A. Calculate thefollowing values for the investment proposals: i. The payback period assuming end-of-the-year cash flows. ii. The discounted payback period assuming a required rate of return of 10% and ending of-the-year cash flows. iii. The NPV of each project. iv. The PI of each project. v. The IRR of each project. vi. The MIRR of each project assuming a reinvestmentrate of 10%. B. Explain which project should be undertaken if the projects are independent. C. Explain which project should be undertaken if the projects are mutually exclusive.
You are considering the following two projects for investment:
Project A Project B
Year 0 ($10000) ($5000)
Year 1 $3000 $3000
Year 2 $7000 $4000
Year 3 $9000 $5000
You must conduct an analysis using your knowledge of capital budgeting (NPV,
(This will require all calculations to be done using cell references and excel functions).
Your analysis will require you to:
A. Calculate thefollowing values for the investment proposals:
i. The payback period assuming end-of-the-year cash flows.
ii. The discounted payback period assuming a required
iii. The NPV of each project.
iv. The PI of each project.
v. The IRR of each project.
vi. The MIRR of each project assuming a reinvestmentrate of 10%.
B. Explain which project should be undertaken if the projects are independent.
C. Explain which project should be undertaken if the projects are mutually exclusive.
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