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ClassOf1 Accounts FCF NPV 20

ClassOf1 Accounts FCF NPV 20

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Published by ClassOf1.com
Free Cash Flow (FCF) Forecast based on assumptions for Best and Worst Case Scenarios.
Net Present Value (NPV) computation based on Cost of Capital, different Discounting Rates and Terminal Values.
Bid Values for Firms/Companies/Projects based on valuations, Initial investments, debt out standings, other conditions, considerations and projects Investment Criteria.

Free Cash Flow (FCF) Forecast based on assumptions for Best and Worst Case Scenarios.
Net Present Value (NPV) computation based on Cost of Capital, different Discounting Rates and Terminal Values.
Bid Values for Firms/Companies/Projects based on valuations, Initial investments, debt out standings, other conditions, considerations and projects Investment Criteria.

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Published by: ClassOf1.com on Oct 14, 2009
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05/13/2013

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Sub: Accounts Topic: Capital Budgeting
www.classof1.com
*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submitting thesame in lieu of your academic submissions for grades.
ClassOf1  provides exert guidance for College, Graduate and High school  homework  and live online tutoring on subjects like Finance, Marketing , Statistics , Economics and others. Check out more solved problems in our  Solution Library .
 
Question: 
Comparing Investment Criteria:
Consider the following two mutually exclusive projects:Year Cash Flow (A) Cash Flow (B)0 -$262,782 -$27,5541 27,300 10,4102 51,000 11,0103 51,000 10,1964 393,000 10,971Whichever project you choose, if any, you require a 15 percent return on your investment.Required:(a) The payback period for Projects A and B is and years, respectively.(Round your answers to 2 decimal places, e.g.32.16.)(b) The discounted payback period for Projects A and B is and years,respectively. (Round your answers to 2 decimal places, e.g.32.16.)(c) The NPV for Projects A and B is $ and $ , respectively.(Round your answers to 2 decimal places, e.g.32.16.)(d) The IRR for Projects A and B is percent and percent, respectively.(Do not include the percent sign (%). Round your answers to 2 decimal places, e.g.32.16.)(e) The profitability index for Projects A and B is and , respectively.(Round your answers to 3 decimal places, e.g.32.161.)(f) Based on your answers in (a) through (e), you will finally choose Project (Click for List)
 
 
Sub: Accounts Topic: Capital Budgeting
www.classof1.com
*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submitting thesame in lieu of your academic submissions for grades.
Solution: 
Year Cash Flow(A)Cum. CashFlows(A) Cash Flow(B)Cum. CashFlows(B)
0 ($262,782) ($262,782) ($27,554) ($27,554)1$27,300$(235,482)$10,410$(17,144)2$51,000$(184,482)$11,010$(6,134)3$51,000$(133,482)$10,196$4,0624$393,000$259,518$10,971$15,033
Payback period3.34 2.60Year Cash Flow(A)PV of NetCash FlowCum. Net CashFlows(A) Cash Flow(B)PV of NetCashFlowCum. NetCashFlows(B)Rate = 15%
0 ($262,782) (262,782.00) (262,782.00) ($27,554) ($27,554) ($27,554)1$27,300 27,300.00 (235,482.00)$10,410 $ 10,410 ($17,144)2$51,000.00 (184,482.00)$$ 11,010 ($6,134)
 
 
Sub: Accounts Topic: Capital Budgeting
www.classof1.com
*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submitting thesame in lieu of your academic submissions for grades.
51,000 11,0103$51,000 51,000.00 (133,482.00)$10,196 $ 10,196 $4,0624$393,000 393,000.00 259,518.00$10,971 $ 10,971 $15,033
Discount Payback Period3.74 3.55
Rate 15%
Year Cash Flow(A) Cash Flow(B)
0 ($262,782) ($27,554)1$27,300$10,4102$51,000$11,0103$51,000$10,1964$393,000$10,971
NPV $57,752.81 $2,800.06Year Cash Flow(A) Cash Flow(B)
0 ($262,782) ($27,554)1$ $

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