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    Capital Budgeting: Crunching the Numbers

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    I would appreciate assistance with the attached problem (Miskell, p. 328, problem #6). I need assistance with completing the problem in Excel. Please show and explain formulas in Excel to help me get a better understanding to complete questions asked.

    Reference:
    Mikesell, J. L. (2010). Fiscal administration: Analysis and applications for the public
    Sector (8th ed.: 2010 custom edition). Mason, OH: Cengage Learning.

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    https://brainmass.com/business/capital-budgeting/capital-budgeting-crunching-the-numbers-512264

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    6. Two public infrastructure projects have the economic profiles that follow:

    Option A Option B
    Year Capital Cost ($) Operating & Maintenance Cost ($) Benefits ($) Capital Cost ($) Operating & Maintenance Cost ($) Benefits ($)

    1 2,000,000 0 0 2,500,000 0 0
    2 1,000,000 10,000 0 500,000 50,000 750,000
    3 500,000 70,000 120,000 100,000 750,000
    4 90,000 600,000 100,000 750,000
    5 90,000 800,000 100,000 750,000
    6 90,000 800,000 100,000 750,000
    7 90,000 800,000 100,000 750,000
    8 90,000 800,000 100,000 750,000
    9 100,000 800,000 100,000 750,000
    10 100,000 500,000 100,000 300,000

    Read Exercise 6 at the end of Chapter 6, "Capital Budgeting, Time Value of Money, and Cost-Benefit Analysis: Process, Structure, and Basic Tools," and write a 3-4 page paper in which you:

    1. Use Excel, to calculate each of the following: Show your work:

    Discussions:
    PAYBACK PERIOD
    Payback period - this tool evaluates when the company's initial capital investment will be recouped from the investment's cash inflows. This can be computed by using the following table
    Option A Option B
    Year Capital Cost ($) Operating & Maintenance Cost ($) Benefits ($) Total cash flows Cash Flows Balance Capital Cost ($) Operating & Maintenance Cost ($) Benefits ($) Total cash flows Cash Flows ...

    Solution Summary

    This solution explains how to calculate payback value, net rate of return, and net present value using Excel.

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