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dear tutor in order to complete the project on e...

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dear tutor in order to complete the project on excel you will need to use the informatin/instructions below and i have attached an excel document.please inform me if there is any additional questions. Project Requirement: Given the estimated initial cash flows of three mutually exclusive projects, decide which one to recommend for implementation. Specific Instructions: 1. Complete the incremental cash flows work sheet for each project. a. You are provided with an Excel? worksheet for each project that lists the initial variable costs per unit, total fixed costs, depreciation expense and number of units sold. These are incurred on a semiannual basis. 1) The sales price and all associated costs and expenses are expected to grow at an annual rate of 3% per year over the life of each project. Depreciation expense will remain constant. 2) The number of units sold for Project 1 is expected decrease at an annual rate of 8%. The number of units sold for Project 2 is expected increase at an annual rate of 11%. The number of units sold for Project 3 is expected increase at an annual rate of 3%. 3) The profits of all projects are taxed at an annual rate of 35%. b. Each project is expected to last five years. The estimated future cash flows are recognized at the end of each semester (i.e. m = 2). 2. Complete the worksheet entitled Profile. a. Copy the incremental cash flows (from the incremental cash flow worksheets) for each project into the appropriate cells. b. Fill out the project NPV columns by computing NPV at each different discount rate. The profiles for each project will automatically be generated on the chart provided. 3. Complete Sheet 4 by computing the WACC of the firm and the IRR and Discounted Payback Period for each project. a. WACC: The capital structure for the firm as well as all the inputs needed to compute the capital costs are provided. Compute the cost of debt using the 35% p.a. tax rate. Compute the component costs and the WACC in the cells provided. b. IRR: Use the IRR function. Since the future cash flows occur on a semiannual basis, the value produced by the IRR function is a semiannual rate. Convert this value to an annual rate. c. DPB: Since the cash flows are semiannual, the DPB function on the TI BA II Plus won?t produce an accurate value. You must compute the DPB by discounting each cash flow to t = 0 then computing the net cumulative cash flows for each time period until you find the payback point. Express the DPB in years. 4. After you have completed Sheet 4, copy it and title the copy ?Sheet 4 Formulas?. While on this worksheet, click on the ?Formulas? tab and select the ?Show Formulas? option. This will display all the formulas you used for your calculations. 5. Recommend a project; do so on Sheet 5. a. Declare your recommendation and explain the rationale you used to make your choice. b. Discuss any observations concerning your computations. Comment on any reservations you may have concerning your computations. Discuss the following issues: 1) Reliability of the IRR calculations. 2) Possible impact that a change in the firm?s WACC may have on the decision. (Assume that the yield curve is currently upward sloping and is expected to remain so for the foreseeable future.) 3) Relative riskiness of the projects. 4) Finally do the sensitivity analysis on excel. Format: 1. All work must be produced and presented in Excel? using the file entitled Project 2 workbook.xls that it?s provided. This file is a template for you to fill-in and use to meet the requirement,no problem,ok thank you,thanks for having resolve this problem. however you have forgotten to resolve this following questions."4) Finally do the sensitivity analysis on excel".,Dear tutor, concerning the sensitivity analysis the grow rate mentioned on the instructions.the following are the growth rate to be used. 2) The number of units sold for Project 1 is expected decrease at an annual rate of 8%. The number of units sold for Project 2 is expected increase at an annual rate of 11%. The number of units sold for Project 3 is expected increase at an annual rate of 3% please let me know if any concern,thanks i will be waiting for your response

 

Paper#5300 | Written in 18-Jul-2015

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