Question

Year Project Al -$5,000 $0 $2,000 $4,000 $6,000 $8,000 Project B|-$10,000 $ol $0 $8,000 $16,000 $16,000 Project C-$20,000-$5,000 $0 sol $0 $60,000

Answer 1

X] 5 2020-09(2) SEP.xlsx - Microsoft Excel ? X FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW DEVELOPER Sign in R19 X fi A D E H J K L M Q 1 Year Year Year Year Year 2 1 3 4 B с 15% PV factor Remarks @ 15% 0.86957 =1 / 1.15 0.75614 =0.86957 / 1.15 0.65752 =0.75614/1.15 0.57175 =0.65752 / 1.15 0.49718 =0.57175 / 1.15 0.43233 =0.49718 / 1.15 F G 20% PV factor Remarks @ 20% 1 0.83333 =1 / 1.2 2 0.69444 =0.83333 / 1.2 3 0.57870 =0.69444 / 1.2 4 0.48225 =0.5787 / 1.2 5 0.40188 =0.48225 / 1.2 6 0.33490 =0.40188 / 1.2 N P 30% PV factor Remarks @ 30% 1 0.76923 =1 / 1.3 2 0.59172 =0.76923 / 1.3 3 0.45517 =0.59172 / 1.3 4 0.35013 =0.45517/ 1.3 5 0.26933 =0.35013 / 1.3 6 0.20718 =0.26933 / 1.3 25% PV factor Remarks @ 25% 1 0.80000 =1 / 1.25 2 0.64000 =0.8 / 1.25 3 0.51200 =0.64 / 1.25 4 0.40960 =0.512 / 1.25 5 0.32768 =0.4096 / 1.25 6 0.26214 -0.32768 / 1.25 R S T 35% PV factor Remarks @ 35% 1 0.74074 =1 / 1.35 2 0.54870 =0.74074 / 1.35 3 0.40644 =0.5487/1.35 4 0.30107 =0.40644 / 1.35 5 0.22301 =0.30107 / 1.35 6 0.16520 =0.22301 / 1.35 2 5 3 6 4 7 5 8 6 9 10 11 Year Year 12 13 1 1 14 2 40% PV factor Remarks @ 45% 0.71429 =1 / 1.4 0.51020 =0.71429 / 1.4 0.36443 =0.5102/1.4 0.26031 =0.36443 / 1.4 0.18593 +0.26031 / 1.4 0.13281 =0.18593 / 1.4 2 45% PV factor Remarks @ 45% 0.68966 =1/1.45 0.47562 =0.68966 / 1.45 0.32802 =0.47562 / 1.45 0.22622 =0.32802 / 1.45 0.15601 =0.22622 / 1.45 0.10759 =0.15601 / 1.45 15 3 3 4 4 16 17 5 5 6 6 18 19 20 21 Year 22 @ 15% Internal rate of return is rate that indicates the net present value = $0. Project A Project B PV factor Present Cash Year PV factor Present Cash flows Year @ 15% value flows @ 15% value 1 $5,000 0.86957 -$4,348 1 -$10,000 0.86957 -$8,696 2 $0 0.75614 $0 2 $0 0.75614 $0 3 $2.000 0.65752 $1.315 3 3 SO 0.65752 SO Sheet1 Sheet2 Sheet3 Sheet4 Sheets Sheeto Sheet7 Sheets Project C Cash PV factor Present flows value -$20,000 0.86957 -$17,391 -$5,000 0.75614 -$3,781 SO 0.65752 SO 23 0.86957 1 24 2 0.75614 0.65752 25 3 Activate Windows Go to Settings to activate Windows READY 3 + 100% i Search the web and Windows 0 TI ENG US 06:10 14-09-20

XIA 5 2020-09(2) SEP.xlsx - Microsoft Excel ? X FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW DEVELOPER Sign in R43 y А A K L M N O Р Q R S T 20 21 22 23 B с E F Н. Internal rate of return is rate that indicates the net present value = $0. Project A Project B PV factor Present Cash PV factor Present Year Cash flows Year @ 15% value flows @ 15% value 1 -$5,000 0.86957 -$4,348 1 -$10,000 0.86957 -$8,696 2 $0 0.75614 $0 2 $0 0.75614 $0 3 $2,000 0.65752 $1,315 3 $0 0.65752 $0 4 $4,000 0.57175 $2,287 4 $8,000 0.57175 $4,574 5 $6,000 0.49718 $2,983 5 $16,000 0.49718 $7,955 6 $8,000 0.43233 $3,459 6 $16,000 0.43233 $6,917 Net present value $5,696 Net present value $10,750 24 0.86957 0.75614 0.65752 0.57175 0.49718 0.43233 Project C Cash PV factor Present Year flows @ 15% value 1 1 -$20,000 0.86957 -$17,391 2 -$5,000 0.75614 -$3,781 3 $0 0.65752 $0 4 $0 0.57175 $0 5 $0 0.49718 $0 6 $60,000 0.43233 $25,940 Net present value $4,768 25 26 27 28 29 30 31 32 33 0.83333 0.69444 34 Project A PV factor Present Year Cash flows @ 20% value 1 -$5,000 0.83333 -$4,167 2 $0 0.69444 $0 3 $2,000 0.57870 $1,157 4 $4,000 0.48225 $1,929 5 $6,000 0.40188 $2,411 6 $8,000 0.33490 $2,679 Net present value $4,010 Project B Cash PV factor Present Year flows @ 20% value 1 -$10,000 0.83333 -$8,333 2 $0 0.69444 $0 3 $0 0.57870 $0 4 $8,000 0.48225 $3,858 5 $16,000 0.40188 $6,430 6 $16,000 0.33490 $5,358 Net present value $7,313 Project C Cash PV factor Present Year flows @ 20% value 1 -$20,000 0.83333 -$16,667 2 -$5,000 0.69444 -$3,472 3 $0 0.57870 $0 4 $0 0.48225 $0 5 $0 0.40188 $0 6 $60,000 0.33490 $20,094 Net present value $45 35 0.57870 0.48225 36 37 0.40188 0.33490 38 39 40 41 Year Year 42 43 0.80000 44 0.64000 Project A PV factor Present Cash flows @ 25% value -$5,000 0.80000 -$4,000 SO 0.64000 SO Sheet2 Project B Cash PV factor Present flows @ 25% value $10,000 0.80000 -$8,000 SO 0.64000 SO Sheet7 Sheets 1 1 2 Sheet1 Activatiews Go to Settings to activate Windows 2 Sheet6 Sheet3 Sheet4 Sheets READY 0 + 100% i Search the web and Windows 0 E ENG US 06:10 14-09-20

X] 5 2020-09(2) SEP.xlsx - Microsoft Excel ? X FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW DEVELOPER Sign in R63 fi A B с D E F G Н. к M N O P Q R S T 40 41 42 43 44 0.80000 0.64000 0.51200 0.40960 Project A PV factor Present Year Cash flows @ 25% value 1 -$5,000 0.80000 -$4,000 2 $0 0.64000 $0 3 $2,000 0.51200 $1,024 4 $4,000 0.40960 $1,638 5 $6,000 0.32768 $1,966 6 $8,000 0.26214 $2,097 Net present value $2,726 Project B Cash PV factor Present Year flows @ 25% value 1 -$10,000 0.80000 -$8,000 2 $0 0.64000 $0 3 $0 0.51200 $0 4 $8,000 0.40960 $3,277 5 $16,000 0.32768 $5,243 6 $16,000 0.26214 $4,194 Net present value $4,714 45 46 47 0.32768 0.26214 48 49 50 51 52 53 54 0.76923 0.59172 0.45517 Project A PV factor Present Year Cash flows @ 30% value 1 -$5,000 0.76923 -$3,846 2 $0 0.59172 $0 3 $2,000 0.45517 $910 4 $4,000 0.35013 $1,401 5 $6,000 0.26933 $1,616 6 $8,000 0.20718 $1,657 Net present value $1,738 Project B Cash PV factor Present Year flows @ 30% value 1 -$10,000 0.76923 -$7,692 2 $0 0.59172 $0 3 $0 0.45517 $0 4 $8,000 0.35013 $2,801 5 $16,000 0.26933 $4,309 6 $16,000 0.20718 $3,315 Net present value $2,733 55 56 0.35013 57 0.26933 58 0.20718 59 60 61 Year Year 62 63 | 0.74074 64 0.54870 Project A PV factor Present Cash flows @ 35% value $5,000 0.74074 -$3,704 SO 0.54870 $0 Sheet2 Sheet3 Sheet4 Sheets Project B Cash PV factor Present flows @ 35% value $10,000 0.74074 -$7,407 SO 0.54870 $0 Sheet7 Sheets + 1 1 2 Sheet1 2 Sheet6 Activatiews Go to Settings to activate Windows READY + 100% i Search the web and Windows 0 E ENG US 06:10 14-09-20

XIA 5 2020-09(2) SEP.xlsx - Microsoft Excel ? X FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW DEVELOPER Sign in R84 : X f A F K L M N O P Q R S T 61 62 63 64 SS SS SS SS B с D E Project A PV factor Present Year Cash flows @ 35% value 1 -$5,000 0.74074 -$3,704 2 $0 0.54870 $0 3 $2,000 0.40644 $813 4 $4,000 0.30107 $1,204 5 $6,000 0.22301 $1,338 6 $8,000 0.16520 $1,322 Net present value $973 0.74074 0.54870 0.40644 0.30107 0.22301 0.16520 65 Н. Project B Cash PV factor Present Year flows @ 35% value 1 $10,000 0.74074 $7,407 2 $0 0.54870 $0 3 $0 0.40644 $0 4 $8,000 0.30107 $2,409 5 $16,000 0.22301 6 $16,000 0.16520 $2,643 Net present value $1,213 66 67 $3,568 68 70 71 72 flows @ 40% 73 74 Project A PV factor Present Year Cash flows @ 40% value 1 $5,000 0.71429 $3,571 2 $0 0.51020 $0 3 $2,000 0.36443 $729 4 $4,000 0.26031 $1,041 5 $6,000 0.18593 $1,116 6 $8,000 0.13281 $1,062 Net present value $377 0.71429 0.51020 0.36443 0.26031 0.18593 0.13281 Project B Cash PV factor Present Year value 1 -$10,000 0.71429 -$7,143 2 $0 0.51020 $0 3 $0 0.36443 $0 4 $8,000 0.26031 $2,082 5 $16,000 0.18593 $2,975 6 $16,000 0.13281 $2,125 Net present value $39 75 76 77 78 79 80 81 Year Year @ 40% 1 Project A PV factor Present Cash flows @ 40% value $5,000 0.68966 $3,448 $0 0.47562 $0 $2.000 0.32802 $656 Sheet2 Sheet3 Sheet4 Sheets 82 83 0.68966 84 0.47562 85 0.32802 1 Project B Cash PV factor Present flows value -$10,000 0.68966 -$6,897 $0 0.47562 $0 SO 0.32802 SO Sheet 7 Sheets 2 3 Sheet1 2 3 3 Sheeto Activatiews Go to Settings to activate Windows READY 0 1 + 100% i Search the web and Windows 0 E ENG US 06:10 14-09-20

x5 2020-09(2) SEP.xlsx - Microsoft Excel ? X FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW DEVELOPER Sign in Q95 X f A F K L M N O P Q R S T 81 82 83 0.68966 84 B с D E Project A PV factor Present Year Cash flows @ 40% value 1 $5,000 0.68966 -$3,448 2 $0 0.47562 $0 3 $2,000 0.32802 $656 4 $4,000 0.22622 $905 5 $6,000 0.15601 $936 6 $8,000 0.10759 $861 Net present value -$91 Н. Project B Cash PV factor Present Year flows @ 40% value 1 $10,000 0.68966 $6,897 2 $0 0.47562 $0 3 $0 0.32802 $0 4 $8,000 0.22622 $1,810 5 $16,000 0.15601 $2,496 6 $16,000 0.10759 $1,721 Net present value -$869 0.47562 0.32802 0.22622 0.15601 0.10759 85 86 87 88 89 90 91 92 93 94 95 Internal rate of return is rate that indicates the net present value = $0. We needs to find the range at which IRR has arrised (Just see the at which rate IRR become negative from positive. Project A Project B IRR range: - 40% to 45% IRR range: - 40% to 45% IRR range: - Rate NPV Rate NPV Lower rate 40% 377 Lower rate 40% 39 Lower rate Higher rate 45% -91 Higher rate 45% -869 Higher rate Difference 5% 468 Difference 5% 908 Difference Project C 15% to 20% Rate NPV 15% $4,768 20% -45 5% 96 97 98 4813 99 100 377 39 4768 4813 101 468 908 102 Positive NPV at lower rate Divided by: Difference Adjusting range Multiply: Difference in rate Percentage Add: Lower rate IRR 103 0.0430 5% Positive NPV at lower rate Divided by: Difference Adjusting range Multiply: Difference in rate Percentage Add: Lower rate IRR 0.8056 5% 4.03% 40% 44.03% Positive NPV at lower rate Divided by: Difference Adjusting range Multiply: Difference in rate Percentage Add: Lower rate IRR 104 0.9907 5% 4.95% 15% 19.95% 0.21% 40% 40.21% 105 106 107 Activate Windows Go to Settings to activate Windows Sheet1 Sheet2 Sheet3 Sheet4 Sheets Sheet6 Sheet7 Sheets + READY 3 + 100% i Search the web and Windows 0 TI ENG US 06:10 14-09-20