Year |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
Project A CF |
-350 |
-250 |
175 |
225 |
375 |
450 |
125 |
Project B CF |
-1000 |
125 |
250 |
300 |
550 |
500 |
200 |
WACC = 12%
a. Calculate the NPV of Project A.?
b. Calculate the IRR of Project A.?
c. Calculate the MIRR of Project A.?
d. Calculate the Payback Period for Project B.?
e. Calculate the Discounted Payback Period for Project B.?
f. Calculate the EAA for Project B.?
g. Calculate the crossover rate for Projects A and B.?
Year | A | B | DCF A | DCF B | A - B |
0 | -350 | -1000 | -350 | -1000 | 650 |
1 | -250 | 125 | -223 | 112 | -375 |
2 | 175 | 250 | 140 | 199 | -75 |
3 | 225 | 300 | 160 | 214 | -75 |
4 | 375 | 550 | 238 | 350 | -175 |
5 | 450 | 500 | 255 | 284 | -50 |
6 | 125 | 200 | 63 | 101 | -75 |
NPV | $283.44 | $259.01 | |||
IRR | 25.73% | 19.47% | |||
MIRR | 19.76% | 16.38% | |||
Payback | 3.53 | 3.59 | |||
Dis. PBP | 4.14 | 4.44 | |||
EAA | $68.94 | $63.00 | |||
Crossover | 10.16% |
NPV and IRR can be calculated using the same function in excel or calculator
Payback Period is the no. of years it takes to recover the initial investment.
Discounted Payback Period (Dis. PBP) is similar to the payback period but with discounted cash flows (DCF) of the project. DCF = CF / (1 + r)^n
EAA can be calculated using PMT function in excel or calculator.
Crossover rate is the IRR of difference in cash flows of A and B.
Get Answers For Free
Most questions answered within 1 hours.