Question 5.1 on the spreadsheet
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This homework submission should include all calculations for part (a), completed on the designated tab of the Homework Student Workbook,
and a document explaining the implications of your findings for the
business or business transaction. After reading the assigned chapters,
respond to the following:
You are a financial analyst for the
Brittle Company. The director of capital budgeting has asked you to
analyze two proposed capital investments: Projects X and Y. Each project
has a cost of $10,000, and the cost of capital for each is 12%. The
projects’ expected net cash flows are shown in the table below.
Expected Net Cash Flows
|
Year |
Project X |
Project Y |
|
0 |
– $10,000 |
– $10,000 |
|
1 |
6,500 |
3,500 |
|
2 |
3,000 |
3,500 |
|
3 |
3,000 |
3,500 |
|
4 |
1,000 |
3,500 |
- Use the Homework Student Workbook to calculate each project’s net
present value (NPV), internal rate of return (IRR), modified internal
rate of return (MIRR), and profitability index (PI). - Which project or projects should be accepted if they are independent?
- Which project or projects should be accepted if they are mutually exclusive?
For additional details, please refer to the Homework Guidelines and
Rubric document in the Assignment Guidelines and Rubrics section of the
course.
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