Excel problem-calculate net present value of each project

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Reference no: EM131346128

Excel Problem

XYZ Co. has an 11% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows.

Years 0 1 2 3 4 5 6 7

Project A (30,000) (38,700) (19,300) (10,000) 60,000 60,000 85,000 (18,000)

Project B (40,500) 13,400 13,400 13,400 13,400 13,400 13,400 0

(numbers in thousands)

Calculations

a. Calculate the Net Present Value of each project.

NPV

Project A use the "NPV" formula to compute these

Project B

b. Calculate the Internal Rate of Return of each project.

IRR

Project A use the "IRR" formula to compute these

Project B

c. Based on the results in a and b, which project should be chosen and why?

d. If XYZ's WACC is 18%, what is the NPV and IRR of each project? Which project should be selected and why?

NPV

Project A use the "NPV" formula to compute these

Project B

IRR

Project A use the "IRR" formula to compute these

Project B

Selected project:

Reference no: EM131346128

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