Online College Courses for Credit

+
FIN 419 WEEK 4 Capital Budgeting Decision Models

FIN 419 WEEK 4 Capital Budgeting Decision Models

Rating:
Rating
(0)
Author: Yanis Gherasim
See More
Fast, Free College Credit

Developing Effective Teams

Let's Ride
*No strings attached. This college course is 100% free and is worth 1 semester credit.

37 Sophia partners guarantee credit transfer.

299 Institutions have accepted or given pre-approval for credit transfer.

* The American Council on Education's College Credit Recommendation Service (ACE Credit®) has evaluated and recommended college credit for 33 of Sophia’s online courses. Many different colleges and universities consider ACE CREDIT recommendations in determining the applicability to their course and degree programs.

Tutorial

FIN 419 WEEK 4 Capital Budgeting Decision Models

 

Buy Solutions: http://hwsoloutions.com/downloads/fin-419-week-4-capital-budgeting-decision-models/

FIN 419 WEEK 4 Capital Budgeting Decision Models

FIN 419 WEEK 4 Capital Budgeting Decision Models

FIN 419 WEEK 4 Capital Budgeting Decision Models

Assignment Steps 

Resources: Microsoft® Excel®, Capital Budgeting Decision Models Template 

Calculate the following problems using Microsoft® Excel®:

Calculate the NPV for each project and determine which project should be accepted.

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%

Your company is considering three independent projects. Given the following cash flow information, calculate the payback period for each. If your company requires a three-year payback before an investment can be accepted, which project(s) would be accepted?

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

Using market value and book value (separately), find the adjusted WACC, using 30% tax rate.

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%

FIN 419 WEEK 4 Capital Budgeting Decision Models

FIN 419 WEEK 4 Capital Budgeting Decision Models