Describe a capital budgeting project (i.e., an investment in fixed assets) that might be undertaken by the company that you have selected. Make sure that the project has an initial investment in Year 0, followed by a series of annual cash flows for at least seven (7) years. In addition, determine the discount rate, or hurdle rate, that is appropriate for this project and explain the determination of that rate.
(Already Completed) Develop your own Excel spreadsheet model that can be used to determine the Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), and Profitability Index (PI).
(Already Completed) The Excel spreadsheet that you develop must use Excel’s automated financial functions for determining the
NPV, IRR, MIRR, and PI.
Following the completion of the spreadsheet analysis, explain whether, or not, the project should be implemented? Also, discuss what the various indicators (i.e., NPV, IRR, MIRR and PI) mean?
The analysis needs to include:
1. Description of Proposed Capital Budgeting Project Describe
a capital budgeting project (i.e., an investment in fixed assets)
that might be undertaken by the company that you have selected. Make sure that the project has an initial investment in Year 0,
followed by a series of annual cash flows for at least seven (7) years. In addition, determine the discount rate, or hurdle rate, that
is appropriate for this project and explain the determination of that rate.
2. Explanation of the Excel Capital Budgeting Model Develop
your own Excel spreadsheet model that can be used to determine
the Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), and Profitability Index (PI).
Explain how the model is constructed and the required inputs. Discuss the outputs of the model.
3. Explanation and Interpretation of Capital Budgeting Criteria Prepare
a written analysis of the results including NPV,IRR,
MIRR, PI, and Profitability Analysis.