Capital Expenditure - Monarch Corporation: Payback, IRR, NPV
Not what you're looking for?
Please see the attached file with 5 Problems on 1 spreadsheet for 1 company. Please solve and include instructions on how to solve.
Required:
A. Compute below the payback, IRR, and NPV. For NPV use the cost of capital as the discount rate. For part A assume the revenue is $200,000.
B. Copy the worksheet and solutions for part a to the worksheet part B, and redo the computations for a revenue of $250,000
C. Copy the worksheet and solutions for part a to the worksheet part C, and redo the computations for a revenue of $300,000. List the three NPVs and compute the expected NPV. Indicate whether monarch should do the project? If so why? If not why?
D. Take the IRRs calculated for the three different levels of revenue and compute the mean (expected return, standard deviation, and coefficient of variation given the probabilities for the three different IRRs. Remember you can list the IRRS based on how often they will occur, 3, 5, or 2 times out of 10.
F. Based on the results for part d, assume the discount rate to compute npv is based on the following:
Purchase this Solution
Solution Summary
A comprehensive problem on capital investment. The solutions include four complete spreadsheets. The students can learn how to find relevant data from the problem to build financial models in Excel for decision-making.
Solution Preview
See the attached file for complete solution. The text here may not be copied exactly as some of the symbols / tables may not print. Thanks
YEARS 0 1 2 3 4 5 6
INITIAL INVESTMENT (NO INCOME TAX AFFECTS)
COST OF THE EQUIPMENT NEEDED 194,000
WORKING CAPITAL NEEDS 50,000
TOTAL INITIAL INVESTMENT 244,000
ANNUAL OPERATING RECEIPTS
SALES 200,000 200,000 200,000 200,000 200,000 200,000
LESS COST OF GOODS SOLD 60,000 ...
Purchase this Solution
Free BrainMass Quizzes
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)