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Perform a financial analysis for a project using the format provided in Figure 4-5. Assume that the projected costs and benefits for this project are spread over four years as follows: Estimated costs are $300,000 in Year 1 and $40,000 each year in Years 2, 3, and 4. Estimated benefits are $0 in Year 1 and $120,000 each year in Years 2, 3, and 4. Use a 7 percent discount rate, and round the discount factors to two decimal places. Create a spreadsheet or use the business case financials template on the Companion website to calculate and clearly display the NPV, ROI, and year in which payback occurs. In addition, write a paragraph explaining whether you would recommend investing in this project, based on your financial analysis

Perform a financial analysis for a project using the format provided in Figure 4-5. Assume that the projected costs and benefits for this project are spread over four years as follows: Estimated costs are $300,000 in Year 1 and $40,000 each year in Years 2, 3, and 4. Estimated benefits are $0 in Year 1 and $120,000 each year in Years 2, 3, and 4. Use a 7 percent discount rate, and round the discount factors to two decimal places. Create a spreadsheet or use the business case financials template on the Companion website to calculate and clearly display the NPV, ROI, and year in which payback occurs. In addition, write a paragraph explaining whether you would recommend investing in this project, based on your financial analysis

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Perform a financial analysis for a project using the format provided in Figure 4-5. Assume that the projected costs and benefits for this project are spread over four years as follows: Estimated costs are $300,000 in Year 1 and $40,000 each year in Years 2, 3, and 4. Estimated benefits are $0 in Year 1 and $120,000 each year in Years 2, 3, and 4. Use a 7 percent discount rate, and round the discount factors to two decimal places. Create a spreadsheet or use the business case financials template on the Companion website to calculate and clearly display the NPV, ROI, and year in which payback occurs. In addition, write a paragraph explaining whether you would recommend investing in this project, based on your financial analysis.

 

 

Financial Analysis for Project Name Created by: Date: Note: Change the inputs, shown in green below (i.e. interest rate, number of years, costs, and benefits). Be sure to double-check the formulas based on the inputs. Discount rate Assume the project is completed in Year 0 Costs Discount factor Discounted costs Benefits Discount factor Discounted benefits Discounted benefits - costs Cumulative benefits - costs ROI Assumptions Enter assumptions here 8.00% 0 140,000 1.00 140,000 Year 2 1 40,000 40,000 40,000 0.93 0.86 0.79 34,400 31,600 243,200 37,200 3 Total 0 200,000 200,000 200,000 0.79 1.00 0.93 0.86 0 186,000 172,000 158,000 516,000 (140,000) 148,800 137,600 126,400 272,800 (140,000) 8,800 146,400 272,800 112% Payback in Year 1 NPV
Transcribed Image Text:Financial Analysis for Project Name Created by: Date: Note: Change the inputs, shown in green below (i.e. interest rate, number of years, costs, and benefits). Be sure to double-check the formulas based on the inputs. Discount rate Assume the project is completed in Year 0 Costs Discount factor Discounted costs Benefits Discount factor Discounted benefits Discounted benefits - costs Cumulative benefits - costs ROI Assumptions Enter assumptions here 8.00% 0 140,000 1.00 140,000 Year 2 1 40,000 40,000 40,000 0.93 0.86 0.79 34,400 31,600 243,200 37,200 3 Total 0 200,000 200,000 200,000 0.79 1.00 0.93 0.86 0 186,000 172,000 158,000 516,000 (140,000) 148,800 137,600 126,400 272,800 (140,000) 8,800 146,400 272,800 112% Payback in Year 1 NPV
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