You are a financial analyst for the Brittle Company. The director of capital bud

Question

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

-----------------------------------------------------------

Questions for the assignment are as follows, the "Workbook" Described is the excel screenshots. I need to fill in the ____ Values based on the questions below. Thanks in advance!

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?

Can the response be placed in the cooresponding sections witin excel? thanks!

Net Present Value (NPV): NPVx $10,000+ -$10,000+ Internal Rate of Return (IRR): olve for each project's IRR, find the discount rates that equate each NPV to IRR RRy

Explanation / Answer

Year 0 1 2 3 4 Project X        -10,000                       6,500                       3,000                       3,000                  1,000 Dis. Fact 1 0.892857143 0.797193878 0.711780248 0.635518078 PV        -10,000                       5,804                       2,392                       2,135                     636              966 Project Y        -10,000                       3,500                       3,500                       3,500                  3,500 Dis. Fact 1 0.892857143 0.797193878 0.711780248 0.635518078 PV        -10,000                       3,125                       2,790                       2,491                  2,224              631 Internal Rate of Return IRRx 18.03% IRRy 14.96% Modified Internal rate of Return TVx =6500*(1.12)^3 =3000*(1.12)^2 =3000*(1.12)^1 =1000        17,255 Tvy =3500*(1.12)^3 =3500*(1.12)^2 =3500*(1.12)^1 =3500        16,728 MIRRx 0.146116437 14.61% MIRRy 0.137263249 13.73% PI NPV COST PVx                          966                    10,000                         1.10 PVx 631                    10,000                         1.06 If both project are independent, than both can be accepted as boht have NPV>0, IRR>12%,MIRR>12%, PI>1 If projects are mutually excusive, than project x should be preferred as It have higher NPV,IRR,MIRR,PI as compare to project Y

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.