Perform financial analysis for a project using the format provided in Figure 4-5 in your textbook (attached business_case_financials template). Assume that the project costs and benefits for this project are spread over four years as follows: Estimated costs are $200,000 in Year 1 and $30,000 each year in Years 2, 3, and 4. Estimated benefits are $0 in Year 1 and $100,000 each year in Years 2, 3, and 4. Use a 9 percent discount rate, and round the discount factors to two decimal places. Using the attached business case financials template, 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. Business case financial spreadsheet and paragraph explaining your recommendations for investing or not in the project.

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
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Perform financial analysis for a project using the format provided in Figure 4-5 in your textbook (attached business_case_financials template). Assume that the project costs and benefits for this project are spread over four years as follows: Estimated costs are $200,000 in Year 1 and $30,000 each year in Years 2, 3, and 4. Estimated benefits are $0 in Year 1 and $100,000 each year in Years 2, 3, and 4. Use a 9 percent discount rate, and round the discount factors to two decimal places. Using the attached business case financials template, 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.

Business case financial spreadsheet and paragraph explaining your recommendations for investing or not in the project.

 

Sheet1
Sheet2
Sheet3
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
8.00%
Assume the project is completed in Year 0
Year
1
3 Total
Costs
140,000
40,000
40,000
40,000
Discount factor
1.00
0.93
0.86
0.79
Discounted costs
140,000
37,200
34,400
31,600
243,200
Benefits
200,000
200,000
200,000
Discount factor
1.00
0.93
0.86
0.79
Discounted benefits
186,000
172,000
158,000
516,000
Discounted benefits - costs
Cumulative benefits - costs
-140,000
148,800
137,600
126,400
272,800
NPV
-140,000
8,800
146,400
272,800
ROI
112%
Payback in Year 1
Assumptions
Enter assumptions here
Transcribed Image Text:Sheet1 Sheet2 Sheet3 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 8.00% Assume the project is completed in Year 0 Year 1 3 Total Costs 140,000 40,000 40,000 40,000 Discount factor 1.00 0.93 0.86 0.79 Discounted costs 140,000 37,200 34,400 31,600 243,200 Benefits 200,000 200,000 200,000 Discount factor 1.00 0.93 0.86 0.79 Discounted benefits 186,000 172,000 158,000 516,000 Discounted benefits - costs Cumulative benefits - costs -140,000 148,800 137,600 126,400 272,800 NPV -140,000 8,800 146,400 272,800 ROI 112% Payback in Year 1 Assumptions Enter assumptions here
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