Compute appropriate net present value, Finance Basics

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Imagine Joy is the project coordinator in a company where four projects are running concurrently. He's employed you as the senior business analyst to perform some financial calculations for him. Below are specific instructions on how to prepare a report for Joy.

  • A2: Project 1
  • A3: Project 2
  • B1: Time
  • C1:I1: 1 2 3 4 5 6 7
  • C2:I2 → -400 200 600 -900 1000 250 230 (cash flow amounts)
  • C3:I3 → -200 150 150 200 300 100 80 (cash flow amounts)
  • J1: NPV (r=0.2)
  • K1: NPV (r=0.01)
  • Compute appropriate NPV's in J2, J3, K2, K3. Format this in blue.
  • B4: IRR Proj 1 No Guess
  • C4: IRR Proj 2 No Guess
  • In B5 and C5, compute the no-guess IRR's.
  • Add a comment in B5 explaining what this # signifies.
  • Next, Joy wants to check if Project 1 and 2 have more than one IRR. Set up a schedule to check this. Use the spreadsheet area between rows 7-19 to do your work. Use appropriate headings. If more than one IRR, format them in red.
  • A20: Project 3
  • B20:E20 → -20 82 -60 2 (cash flow amounts)
  • C21: Plain IRR
  • Compute the no-guess IRR in D21.
  • Now, Joy wants you to check if Project 3 has a unique IRR. Set up a schedule to check this. Use the spreadsheet area below rows 21 to do your work. Use appropriate headings. If there's a unique IRR, format them in yellow. Else, flag in red.
  • A36: Project 4
  • B36:D36 → 10 -30 35 (cash flow amounts)
  • Finally, Joy wants you to check if Project 4 has an IRR at all. Set up a schedule to check this. Use the spreadsheet area below rows 36 to do your work. Use appropriate headings. If there's an IRR, format them in blue. Else, flag the results in red.

 


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