Two alternative start-up FinTech projects were being contemplated for financing by a venture capitalist to determine which one is more viable, based on cost and returns. Table 4.1 below shows a five-year schedule for the two projects: Table 4.1 Project Start of Project End of 1st Year End of 2nd Year End of 3rd Year End of 4th Year End of 5th Year BlockChain GoPay ($230,000) ($32,000) $660,000 $96,000 $106,000 $119,000 DLT CloudPay ($276,000) $20,000 $65,000 $96,000 $102,000 $118,000 If you were the Project Manager on the Venture Capitalist team, using the Net Present Value (NPV) method, which project would you recommend be financed based strictly on the schedule shown above and an interest rate of 7.5%? Use a Microsoft Excel, or any other method to deduce/calculate the Internal Rate of Return (IRR) for both projects. Explain how you would advise the Bank which project to finance using the result from the IRR method?
Two alternative start-up FinTech projects were being contemplated for financing by a venture capitalist to determine which one is more viable, based on cost and returns. Table 4.1 below shows a five-year schedule for the two projects: Table 4.1 Project Start of Project End of 1st Year End of 2nd Year End of 3rd Year End of 4th Year End of 5th Year BlockChain GoPay ($230,000) ($32,000) $660,000 $96,000 $106,000 $119,000 DLT CloudPay ($276,000) $20,000 $65,000 $96,000 $102,000 $118,000 If you were the Project Manager on the Venture Capitalist team, using the Net Present Value (NPV) method, which project would you recommend be financed based strictly on the schedule shown above and an interest rate of 7.5%? Use a Microsoft Excel, or any other method to deduce/calculate the Internal Rate of Return (IRR) for both projects. Explain how you would advise the Bank which project to finance using the result from the IRR method?
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
Problem 1PS
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Two alternative start-up FinTech projects were being contemplated for financing by a venture capitalist to determine which one is more viable, based on cost and returns. Table 4.1 below shows a five-year schedule for the two projects:
Table 4.1
|
Project |
Start of Project |
End of 1st Year |
End of 2nd Year |
End of 3rd Year |
End of 4th Year |
End of 5th Year |
|
BlockChain GoPay |
($230,000) |
($32,000) |
$660,000 |
$96,000 |
$106,000 |
$119,000 |
|
DLT CloudPay |
($276,000) |
$20,000 |
$65,000 |
$96,000 |
$102,000 |
$118,000 |
- If you were the Project Manager on the Venture Capitalist team, using the
Net Present Value (NPV) method, which project would you recommend be financed based strictly on the schedule shown above and an interest rate of 7.5%? - Use a Microsoft Excel, or any other method to deduce/calculate the
Internal Rate of Return (IRR) for both projects. Explain how you would advise the Bank which project to finance using the result from the IRR method?
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