The following questions are based on the Ch11 Lecture note. From Lecture note #11-7, suppose...
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The following questions are based on the Ch11 Lecture note. From Lecture note #11-7, suppose that the cash flows for year 3 are $90 for L and $30 for S but all other values are the same. Answer the questions below. Show your work
1. Calculate the NPVL. SHOW YOUR WORK NOT USING EXCEL OR FINANCIAL CALCULATOR.
2. Calculate the NPVS. SHOW YOUR WORK NOT USING EXCEL OR FINANCIAL CALCULATOR.
Projects we'll examine: Cash Flow Year L S ACF 0 -100 -100 0 1 10 70 -60 2 60 50 10 3 80 20 60 ACF is the difference between CFL and CFs. We'll use ACF later. What is Project L's NPV? WACC = 10% Year 0 1 - CFt. - 100 10 60 80 PV of CF $100.00 9.09 49.59 60.11 NPVL = $ 18.79 2. 3 Excel: =NPV(rate, CF 1:CF.) + CF, Here, CF, is negative. What is Project S'NPV? WACC = 10% Year 0 1 2 3 CFT -100 70 50 20 PV of CF $100.00 63.64 41.32 15.02 NPVs = $ 19.98 Excel: =NPV(rate,CF :CFn) + CF Here, CF, is negative
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