#### Question Details

(Solved by Expert Tutors) Need help with the Excel calculations for this;

Applying Variou

Applying Various Capital Budgeting

Methodologies

The objective of a firm is to maximize shareholder wealth.? The Net Present Value (NPV) method is one of the useful methods that help financial managers to maximize shareholders? wealth.?

Suppose the company?that you selected for the Module 1 SLP is considering a new project that will have an initial cash outflow of $125,000,000.? The project is expected to have the following cash inflows:

Year??? Cash Flow ($)

1????????? 2,000,000

2????????? 3,500,000

3????????? 13,500,000

4????????? 89,750,000

5????????? 115,000,000

6????????? 120,000,000

If the project?s cost of capital (discount rate) is 12.5%, what is the project?s NPV? Should the project be accepted?? Why or why not??

You may use the following steps to calculate NPV:

1.???????? Calculate present value (PV) of cash inflow (CF)

PV of CF = CF1 / (1+r)^1 + CF2 / (1+r)^2 + CF3 / (1+r)^3 + CF4 / (1+r)^4 + CF5 / (1+r)^5 + CF6 / (1+r)^6

Where the CFs are the cash flows and r = the project?s discount rate.

2.???????? Calculate NPV

NPV = Total PV of CF ? Initial cash outflow

or -Initial cash outflow + Total PV of CF

r = Discount rate (12.5%)?

If you do not know how to use Excel or a financial calculator for these calculations, please use the present value tables.

Online Learning Center. (n.d.) Present and Future Value Tables.?Retrieved from http://highered.mheducation.com/sites/0072994029/student_view0/present_and_future_value_tables.html

Also, consider reviewing?http://www.tvmcalcs.com for financial calculator tutorials.?

Besides NPV, there are other capital budgeting methodologies including the regular payback period, discounted payback period, profitability index (PI), internal rate of return (IRR), and modified internal rate of return (MIRR).? These methodologies don?t necessarily give the same accept/reject decisions as NPV.?

If the firm has a requirement that projects are paid back within 3 years, would the project be accepted based off the regular payback period?? Why or why not?? Would the project be accepted based off the discounted payback period?? Why or why not??

What is the project?s internal rate of return (IRR)?? Based off IRR, should the project be accepted?? Why or why not? Recall the project?s cost of capital is 12.5%.? What is the project?s modified internal rate of return (MIRR)?? Based off MIRR, should the project be accepted?? Why or why not??

What are the advantages/disadvantages of NPV, regular payback, discounted payback, PI, IRR, and MIRR?? Present these advantages/disadvantages in a table.

**Solution details:**

Answered

QUALITY

Approved

ANSWER RATING

This question was answered on: * Apr 19, 2020 *

##### Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .

#### About this Question

STATUSAnswered

QUALITYApproved

DATE ANSWEREDApr 19, 2020

EXPERTTutor

ANSWER RATING

#### YES, THIS IS LEGAL

We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.

You can also use these solutions:

- As a reference for in-depth understanding of the subject.
- As a source of ideas / reasoning for your own research (if properly referenced)
- For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).

#### NEW ASSIGNMENT HELP?

### Order New Solution. Quick Turnaround

Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions.
New orders are original solutions *and precise to your writing instruction requirements. Place a New Order using the button below.*

WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN A DEADLINE.