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Calculate the npvirr and mirr, Finance Basics
Task:
Decide upon 2 mutual exclusive projects.
Calculate the income statement, balance sheet, and statement of cash flows for all year
Calculate the NPV, IRR, and MIRR.
Check if IRR and MIRR are consistent with the NPV for various rates of cost of capital.
Assumptions:
One project has a reinvestment in the middle of its productive life of 50% of the initial cost
Project length is at least 4 years
30% annual growth of Revenues
Profit Margin 2% in t=0 (that might change over time)
Dividend is 0% of net income
You are operating at 100% capacity in year zero and thereafter
Initiating the investments will have some impact on net working capital
At least one of your balance sheet entries, such as inventory, should be forecasted based on a regression (utilize the attached historic data)
If you need additional financing, finance 40% with debt and 60% with equity
You will finance 40% of the asset with debt in either case
Taxes are 35%, cost of debt is 5% and cost of equity is 12%
Customers pay after 60 days
Suppliers are paid after 90 days
If you sell your assets in the final year you will incur an extraordinary gain
Posted Date: 3/8/2013 4:23:13 AM  Location : United States
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