Question

Preferably in excel form

Part B: Calculate using Excel formulas, the NPV of each of the 3 projects It is possible that ABC Company may not be able to advise ABC Company complete all 3 projects. Therefore, as to the order in which they should pursue the projects (i.e. which project should ABC Company attempt to do first, second, and last). Provide justification and analysis as to why you chose the order you did. The analysis must also be done in Excel, not in a separate document.

Answer 1

		6.00%
Year	Cash Flow	PV factor = 1/ (1+r)^t	PV
0	(80,000)	1.000	(80,000.00)
1	48,000	0.943	45,283.02
2	36,000	0.890	32,039.87
3	22,000	0.840	18,471.62
4	-	0.792	-
5	-	0.747	-
		NPV	15,794.51

Project 2

		8.00%
Year	Cash Flow	PV factor = 1/ (1+r)^t	PV
0	(175,000)	1.000	(175,000.00)
1	85,000	0.926	78,703.70
2	74,000	0.857	63,443.07
3	38,000	0.794	30,165.63
4	26,800	0.735	19,698.80
5	19,000	0.681	12,931.08
		NPV	29,942.28

Project 3

		12.00%
Year	Cash Flow	PV factor = 1/ (1+r)^t	PV
0	(22,700)	1.000	(22,700.00)
1	13,000	0.893	11,607.14
2	13,000	0.797	10,363.52
3	-	0.712	-
4	-	0.636	-
5	-	0.567	-
		NPV	(729.34)

Ranking for projects

Project	NPV	Rank
1	15,794.51	2
2	29,942.28	1
3	(729.34)
Since NPV is highest in project 2, this should be taken up first followed by project 1.
Project 3 should not be accepted as this provides negative NPV