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##### SPREADSHEET PROBLEM

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solution

**Question**

SPREADSHEET PROBLEM;(10-23);Build a Model: Capital;Budgeting Tools;Start with the partial model in the file Ch10 P23 Build a Model.xls on the textbook?s;Web site.Gardial Fisheries is considering two mutually exclusive investments. The;projects? expected net cash flows are as follows;Expected Net Cash Flows;Year Project A Project B;0 -$375?$575;1?300 190;2?200 190;3?100 190;4 600 190;5 600 190;6 926 190;7?200 0;a. If each project?s cost of capital is 12%, which project should be selected? If the;cost of capital is 18%, what project is the proper choice?;b. Construct NPV profiles for Projects A and B.;c. What is each project?s IRR?;d. What is the crossover rate, and what is its significance?;e. What is each project?s MIRR at a cost of capital of 12%? At r = 18%?;(Hint: Consider Period 7 as the end of Project B?s life.);f. What is the regular payback period for these two projects?;g. At a cost of capital of 12%, what is the discounted payback period for these two;projects?;h. What is the profitability index for each project if the cost of capital

Paper#35463 | Written in 18-Jul-2015

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