question archive Module 3 - Case Capital Budgeting and the Cost of Capital Assignment Overview Before starting on this assignment, make sure to thoroughly review the required background materials
Subject:SociologyPrice: Bought3
Module 3 - Case
Before starting on this assignment, make sure to thoroughly review the required background materials. Make sure you fully understand both the basic concepts as well as how to calculate payback period, NPV, IRR, and WACC. Submit your answers in a Word document. Make sure to show your work for all quantitative questions and fully explain your answers using references to the background readings for any conceptual questions. Questions 1 and 2 will require Excel. Attach an Excel file to show your computations for Questions 1 and 2.
For each project, compute the payback period, NPV, and internal rate of return (IRR). Then explain whether each project should be accepted based on these three criteria.
Project A
Project B
Initial Investment
$40,000
$28,000
Year
Cash Flows
1
$10,000
$10,000
2
$10,000
$13,000
3
$10,000
$5,000
4
$10,000
$5,000
5
$10,000
$6,000
Based on the table below, answer the following items:
Souvenir Stand
Hot Dog and Beer Stand
Initial Investment
$100,000
$150,000
Annual Cash Inflows (5 Years)
Outcome
Pessimistic
$30,000
$50,000
Most likely
$50,000
$60,000
Optimistic
$70,000
$70,000