Competency 1

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University of Phoenix *

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543

Subject

Finance

Date

Feb 20, 2024

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xlsx

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8

Uploaded by ConstablePigeon3144

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Project A New Machine Cash Inflow $126,000 Cash Outflow $400,000 Rate of Return 8% Net Present Value Step 1: Cash Inflows Annual Cash Inflow $126,000.00 Cash Inflows * 8% Interest Period 1 126000 x 0.925926 Period 2 126000 x 0.857339 Period 3 126000 x 0.793832 Period 4 126000 x 0.735030 Step 2: Cash Outflows Cash Expenditure $ (400,000.00) Cash outflows * 8% Interest Period 1 400000 x 0.925926 Period 2 400000 x 0.857339 Period 3 400000 x 0.793832 Period 4 400000 x 0.735030 Step 3: Net Present Value Net Present Value $ 16,044.43 Internal Rate of Return IRR(value,guess) New Immediate Outflow $ (400,000.00) Net Inflow 1 $ 126,000.00 Net Inflow 2 $ 126,000.00 Net Inflow 3 $ 126,000.00 Net Inflow 4 $ 126,000.00 Internal Rate of Return 10%
Investment A PV factor @ 8% Present Values of Cash Flows Investment B PV factor @ 8% Present Values of Cash Flows Required Return Investment A NET PRESENT VALUE NPV = (RATE, VALUE 1, VALUE Investment B NET PRESENT VALUE NPV = (RATE, VALUE 1, VALUE
PV(rate,nper,pmt) $116,666.68 $ 108,024.71 $ 100,022.83 $ 92,613.78 PV(rate,nper,pmt) $370,370.40 $ 342,935.60 $ 317,532.80 $ 294,012.00
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Initial Year 1 2 $ (400,000.00) $ 126,000.00 $ 126,000.00 0.925926 0.857339 $ (400,000.00) $116,666.68 $ 108,024.71 $ (160,000.00) $ 52,800.00 $ 52,800.00 0.925926 0.857339 $ (160,000.00) $48,888.89 $ 45,267.50 8% INTERNAL RATE OF RETURN $16,044.43 IRR=IRR(C50:G50) 2,….) $13,778.05 INTERNAL RATE OF RETURN 2,….) IRR = IRR(C51:G51)
Project B Training Program Cash Inflow $ 52,800.00 Cash Outflow $ 160,000.00 Rate of Return 8% Net Present Value Step 1: Cash Inflows PV(rate,nper,pmt) Annual Cash Inflow $ 52,800.00 Cash Inflows * 8% Interest Period 1 52800 x 0.925926 $48,888.89 Period 2 52800 x 0.857339 $ 45,267.50 Period 3 52800 x 0.793832 $ 41,914.33 Period 4 52800 x 0.735030 $ 38,809.58 Step 2: Cash Outflows PV(rate,nper,pmt) Cash Expenditure $ (160,000.00) Cash outflows * 8% Interest Period 1 160000 x 0.925926 $148,148.16 Period 2 160000 x 0.857339 $ 137,174.24 Period 3 160000 x 0.793832 $ 127,013.12 Period 4 160000 x 0.735030 $ 117,604.80 Step 3: Net Present Value Net Present Value $ 13,778.05 Internal Rate of Return IRR(value,guess) New Immediate Outflow $ (160,000.00) Net Inflow 1 $ 52,800.00 Net Inflow 2 $ 52,800.00 Net Inflow 3 $ 52,800.00 Net Inflow 4 $ 52,800.00 Internal Rate of Return 12%
3 4 $ 126,000.00 $ 126,000.00 0.793832 0.73503 $ 100,022.83 $ 92,613.78 $ 52,800.00 $ 52,800.00 0.793832 0.73503 $ 41,914.33 $ 38,809.58 10% 12%
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