NPV Crossover

xlsx

School

West Chester University of Pennsylvania *

*We aren’t endorsed by this school

Course

399

Subject

Finance

Date

Jan 9, 2024

Type

xlsx

Pages

11

Uploaded by williamboswell222

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NPV Profile and Crossover (Problem 12) Spring 2022 This worksheet requires you to use Excel's NPV and IRR functions. In addition, you will use Excel's Data Table and charting tools to create an NPV profile and identify the crossover rate for two projects. Correct answers will appear in a blue font.
Cash Flow Analysis Interest Rate: 9.00% A. Find the net present value of the following annual cash flows. Use an interest rate of 10%. Please show the present value of each individual cash flow, and the total present value. Time 1 2 3 4 5 6 Cash Flow 574 864 1,246 2,748 3,367 2,437 Present Values Total Present Value B. Assume this project costs $10,000. What is the NPV? Project Cost: $ 10,000 Use the Excel net present value function to solve the same problem. D. Use the Excel IRR function to calculate the project's IRR. 0 1 2 3 4 5 6 $ (10,000) 574 864 1,246 2,748 3,367 2,437 E. Use the Excel "Goal Seek" tool to calculate the project's IRR. 0 1 2 3 4 5 6 $ (10,000) 574 864 1,246 2,748 3,367 2,437 NPV https://youtu.be/f0F8pX0rToE Step 1: Enter a formula to calculate the NPV in cell B30. Reference the interest rate in cell G1. Step 2: Go to "Tools" on the main menu and then to "Goal Seek" enter the information shown in the screen print to the right.
7 8 9 10 2,276 1,839 1,264 623 7 8 9 10 2,276 1,839 1,264 623 7 8 9 10 2,276 1,839 1,264 623
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NPV Profile and Crossover (Problem 12) To use Goa Discount Rate 11.00% 1) Click on 2) Click on Project A Project B 3) Select "G Cash Flow Cash Flow 0 (37,000) (37,000) 1 19,000 6,000 2 14,500 12,500 3 12,000 19,000 4 9,000 23,000 Total 17,500 23,500 IRR NPV ### Difference in Project NPV's (B-A) Present Value Cash Flow Present Value Cash Flow https://youtu.be Use Excel's "Goal Se the discount rate (c NPV of the projects difference (cell G19
The Crossover rate is ### ### Procject A Project B NPV 0% Step 1: Highlight cells C32:D63 1% Step 2: On the "Data" tab select "What-if-Analysis", 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% Use Excel's "data table" feature to complete this NPV table, and then use the "Chart" feature to prepare an NPV profile for the two projects. Your chart should look like figure 9-8 from the text.
12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 26% 27% 28% 29% 30%
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al Seek: n the "Data" tab n "What-if analysis" Goal Seek" e/IvXBKhMENIc eek" funtion to find cell D3) that makes the s equal. That is the 9) equal to zero.
then "Data Table".
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