Question

D 1 Year 2 Cash flow -750,000 500,000 500,000 3 500,000 4 500,000 500,000 -2,000,000 5% 10% 45% 4 Cost of capital,r 5 NPV 6 Accept/reject? 3 Part d: to decide on a range of cost of capital to accept/reject, make a table of NPV for different r NPV AFAMAA 10 Cost of capital, 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 30% 34% 38% 42% 46% 50% 54%

PLEASE ONLY SHOW HOW TO DID IN EXCEL AND ONLY HARD CODED FORMULAS

Answer 1

For your spreadsheet formulas are as follows

NPV for a to c =NPV(B4,$C$2:$H$2)+$B$2

NPV for d =NPV(A11,$C$2:$H$2)+$B$2

Still I have solved whole as follows:-

3 Year cash flow 01 -750000 1 500000 500000 500000 500000 500000 61 -2000000 5% Cost of capital (r) NPV 10% $16,445.52 45% ($27,426.30) ($77,692.46 cost of capital NPV ($250,000.00) 2% ($169,213.01) 4% ($104,717.89) 6% ($53,739.19) 8% ($13,984.24) 10% $16,445.52 12% $39,125.86 14% $55,367.39 16% $66.262.32 18% $72,722.43 20% $75,510.12 22% | $75,263.73 24% $72,518.43 26% $67,723.34 30% $53,432.45 34% $34,743.10 38% $13,317.96 42% ($9,668.72) 46% ($33,390.60) 50% ($57,270.23) 54% ($80,908.74)

Formulas used

NPV for a to c =NPV(K9,$M$5:$R$5)+$L$5

NPV for d =NPV(K14,$M$5:$R$5)+$L$5

(a) project is not acceptable at 5% cost of capital

(b) project is acceptable at 10% co of capital

(c) project is not acceptable at 45% cost of capital

(d)10%-38% cost of capital is acceptable

I hope my efforts will be fruitful to you...?