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    NPV, IRR, Profitability Index and Payback

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    18. You are thinking about acquiring a new company. The company is at a bargain asking price of $400,000. You have your expert accountants project a 10 year income statement (see below) based on how well you think you could run this new venture. Now you need to project a ten year cash flow and determine if you should acquire this new entity. You are currently using a 15% discount rate in your calculations. (use at least two decimal places in all calculations)

    Net Present Value $_____________________

    Internal rate of return _____________________%

    Profitability Index _____________________

    Payback _____________________ yrs.

    Should you acquire the new company? __________
    Net Income
    Depreciation After Taxes Net Cash Flow

    Year 1 42,870 184,278 ___________
    Year 2 73,470 159,018 ___________
    Year 3 52,470 162,159 ___________
    Year 4 37,470 158,752 ___________
    Year 5 26,790 149,365 ___________
    Year 6 26,760 129,707 ___________
    Year 7 26,790 105,576 ___________
    Year 8 13,380 84,448 ___________
    Year 9 0 57,539 ___________
    Year 10 0 16,053 ___________

    Please respond in Excel.

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    https://brainmass.com/business/capital-budgeting/npv-irr-profitability-index-and-payback-55873

    Solution Summary

    Calculates Net Present Value, Internal rate of return, Profitability Index and Payback.

    $2.19

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