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А в Enter titles and accounts in the green cells Enter Numbers in the blue cells Enter your Calculations in the yellow cells Frankfort Enterprises is trying to select the best investment from among three alternatives to shift and process Kentucy Blue grass seeds. Each alternative involves an initial outlay of $56,500. Their cash flows follow: Evaluate and rank each alternative based on 1) payback period, 2) net present value (use a 12% discount rate) | | - Year | 1 2 0 3 11 PAYBACK PERIOD A 20,000 25,000 5,000 B 15,000 45,000 45,000 10,500 C 17,500 25,000 35,000 1 13 Decision 15 Net Present Value 12% Ν ω use NPV 20 function here 21 less investment 22 NetPresent 24 Decision

Answer 1

Solution: Year 1 A 20,000 25,000 15,000 2.67 3 B 15,000 45,000 10,500 1.89 1 C 17,500 25,000 35,000 2.36 2 15 Payback period 16 Decision 12% 1 B C A B 20,000 15,000 25,000 45,000 15,000 10,500 48,464| 56,740 55,000 55,000 -6,536 1,740 D C 17,500 25,000 35,000 60,467 55,000 5,467 5 NPV function 6 Initial investment 7 Net Present The option with highest NPV willbe selected i.e. Option C and Option B and Option A will not be selected Working: 1 B5 - ENPV(A1, B2:34) C 12% A B 1 20,000 15,000 25,000 45,000 15,000 10,500 5 NPV function 48,464| 56,740 6 Initial investment 55,000 55,000 7 Net Present -6,536 1,740 D C 17,500 25,000 35,000 60,467 55,000 5,467 PENPV(A1, D2:04) А B 12% A 20,000 2 25,000 15,000 5 NPV function 48,464 6 Initial investment 55,000 7 Net Present -6,536 3 C D B 15,000 17,500 45,000 25,000 10,500 35,000 56,74060,467 55,000 55,000 1,740 5,467 CS - ENPV/A1, C2:04) 12% 1 2 3 А 20,000 25,000 15,000 48,464 55,000 -6,536 15,000 17,500 45,000 25,000 10,500 35,000 56,7401 60,467 55,000 55,000 1,740 5,467 5 NPV function 6 Initial investment Net Present