last excel

xlsx

School

Temple University *

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Course

3901

Subject

Finance

Date

Apr 3, 2024

Type

xlsx

Pages

5

Uploaded by joeyleone

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ADVANCED PROBLEM 11-2 FOR SPREADSHEET APPLICATIO Given Data Average company beta 1.05 Expected market return 11.00% Risk-free rate 2.75% Solution Average hurdle rate 11.41% Project IRR Beta 1 6.25% 0.35 reject 2 6.89% 0.65 reject 3 7.54% 0.55 reject 4 8.25% 0.70 reject 5 9.83% 0.85 reject 6 10.12% 0.95 reject 7 12.84% 1.15 accept 8 13.01% 1.25 accept 9 13.66% 1.40 accept 10 14.21% 1.50 accept 11 17.85% 1.45 accept 12 18.93% 1.55 accept Risk and cost of equity. The following table is a list of potential projects in an all-eq 11%, and the risk-free rate is 2.75%, which projects are accepted and which are rejec beta, which projects does it now accept that it previously rejected, and which project firm accepts given the individual hurdle rates? Accept or Reject vs. Average Hurdle Rate
Requirements 1. Start Excel - completed. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Save the workbook. Close the workbook and then exit Excel. Submit the wo In cell E14 , by using cell references, calculate the company's average hurdle In cell F17 , by using absolute and relative cell references, enter the company Use the Excel IF function to enter "Accept" if the project's IRR is greater In cell range F18:F28 , by using absolute and relative cell references, enter th company's average hurdle rate. Copy the content from cell F17 across the co In cell G17 , by using cell references, calculate the risk-adjusted hurdle rate f relevant cells from the Given Data section. In cell range G18:G28 , by using cell references, calculate the risk-adjusted h column down to row 28 . In cell H17 , by using absolute and relative cell references, enter the compan rate. Use the Excel IF function to enter "Accept" if the project's IRR is gre In cell range H18:H28 , by using absolute and relative cell references, enter projects' risk-adjusted hurdle rates. Copy the content from cell H17 across th In cell I17 , by using cell references, determine whether the company's decis function to enter "No" if the decision based on the company's average hurdle or "Yes" otherwise. In cell range I18:I28 , by using cell references, determine whether the compa Copy the content from cell I17 across the column down to row 28 . In cell J17 , by using a cell reference, enter the company's final investment d Excel IF function to enter "Yes" if the project is a go or "No" otherwise. In cell range J18:J28 , by using cell references, enter the company's final inv hurdle rates. Copy the content from cell J17 across the column down to row
ON 5.64% accept yes yes 0.08% accept yes yes 0.00% accept yes yes 0.00% accept yes yes 11.10% reject no no 0.31% accept yes yes #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! 64.18% reject yes no 55.28% reject yes no 69.59% reject yes no 84.59% reject yes no quity firm. If the company has an average beta of 1.05, the expected return on the market is cted? If the company chooses a hurdle rate for each project based on the project’s listed ts does it now reject that it originally accepted? What is the final set of projects that the Risk-Adjusted Hurdle Rate Accept or Reject vs. Adjusted Hurdle Rate Decision Changes Is the Project a GO?
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Points 0 1 1 1 1 1 1 1 1 1 1 1 orkbook as directed. 0 e rate. Use the relevant cells from the Given Data section. y's investment decision on project 1 based on the company's average hurdle rate. than the average hurdle rate or "Reject" otherwise. he company's investment decisions on projects 2 through 12 based on the olumn down to row 28 . for project 1. Use the project's beta in cell E17 and absolute references to the hurdle rates for projects 2 through 12. Copy the content from cell G17 across the ny's investment decision on project 1 based on the project's risk-adjusted hurdle eater than the risk-adjusted hurdle rate or "Reject" otherwise. the company's investment decisions on projects 2 through 12 based on the he column down to row 28 . sion on project 1 changes based on different hurdle rates. Use the Excel IF e rate is the same as the decision based on the project's risk-adjusted hurdle rate any's decisions on projects 2 through 12 change based on different hurdle rates. decision on project 1 based on the project's risk-adjusted hurdle rate. Use the vestment decisions on projects 2 through 12 based on the projects' risk-adjusted w 28 .