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Instructions

Instructions: Complete the following exercises in Microsoft Excel (preferred) using cell formulas. If the assignment is completed in Microsoft Word, provide explanations (100 words) to each of the answers along with any relevant calculations to receive credit. Your part in completing the assignment is to demonstrate an understanding and application of the concepts and problem-solving. Review the grading rubric below to adhere to assignment/grading criteria.

Save your file as “LastnameFirstinitial-FINC300-5.” Submit your assignment by 11:59 PM ET on Day 7 (Sunday).

Your assignment will be evaluated according to the following Assignment Requirements:

Guidelines Assignment Grading Criteria Points

Content (60%) Response demonstrates a clear understanding of the key elements of assignment questions 12

Response thoroughly covers the question elements in a substantive manner 12

Answers demonstrate critical thinking and analysis 12

Answers are complete and accurate 12

Answers provide adequate information on the given topic 12

Section Total 60

Organization & Calculations (30%) Explanations flow in a logical sequence 7

Answers are correct and address major points of exercise 8

Answers and/or formulas are present and have a logical flow 8

Student explanations address major points 7

Section Total 30

Assignment Format, Writing Style, & Grammar (10%) Sentences are well constructed, complete, clear, and concise 1

The tone is appropriate to the content and assignment 1

Grammar, spelling, and punctuation are correct 2

Assignment is submitted in Microsoft Excel/Word format 5

Section Total 10

Total Score 100

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Week 5 – Signature Assignment

Chapters 7 & 8

Instructions: Complete the following exercises in Microsoft Excel (preferred). If the

assignment is completed in Microsoft Word, provide explanations (100 words) to each

of the answers along with any relevant calculations to receive credit. Your part in

completing the assignment is to demonstrate an understanding and application of the

concepts and problem-solving. Review the grading rubric below to adhere to

assignment/grading criteria.

A project has an initial cost of $45,000. The incremental inflows associated with the

project are $20,000 in year 1, $15,000 in year 2, $10,000 in year 3 and $8,000 in year 4.

All cash inflows are at the end of the year. The appropriate discount rate for this project

is 8.0%. (HINT: Possibly use Excel Worksheet)

1. What is the project’s payback period?

a.

5.00 Years

b.

3.00 Years

c.

8.00 Years

d.

7.00 Years

2. What is the project’s discounted payback period?

a.

2.87 Years

b.

3.97 Years

c.

10.25 Years

d.

6.75 Years

3. What is the project’s net present value?

a.

$197.16

b.

$278.96

c.

$345.21

d.

$225.35

4. What is the project’s internal rate of return? Calculate to two decimal places.

a.

3.52%

b.

8.23%

c.

5.35%

d.

2.75%

5. What is the project’s modified internal rate of return? Calculate to two decimal

places.

a.

3.52%

b.

7.60%

c.

5.35%

d.

8.12%

A project has an initial cost of $45,000. The incremental inflows associated with the

project are $20,000 in year 1, $15,000 in year 2, $10,000 in year 3 and $8,000 in year 4.

All cash inflows are at the end of the year. The appropriate discount rate for this project

is 8.0%. The component costs of capital and their weights are given below:

6. What is the project’s weighted-average cost of capital?

kd = 10%

kp = 5%

ke = 8%

T = 40%

a.

6.8%

b.

2.4%

c.

4.3%

d.

8.5%

wd = 45%

wp = 10%

we = 45%

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