BUS FPX 3062 Assessment 5 Capital Budgeting
Student Name
Capella University
BUS-FPX3062 Fundamentals of Finance
Prof. Name
Date
Table 1: Capital Budgeting Analysis
| Problem | Description | Calculation | Interpretation |
|---|---|---|---|
| 1 | Compute the NPV statistic for Project Y. Decide whether to accept or reject the project with a 10% cost of capital. | NPV = -$139.18 | With a negative NPV, the project should be rejected. |
| 2 | Compute the payback period statistic for Project X and recommend acceptance or rejection with a maximum payback of four years. | Payback period = 3.2 years | Since the payback period is less than 4 years, the project can be accepted. |
| 3 | Two mutually exclusive projects, A and B, have projected cash flows. Compute NPV and IRR for both projects with a 10% cost of capital. | NPV(A) = $8,391.86 NPV(B) = $10,710.61 IRR(A) = 16.99% IRR(B) = 14.75% | Project B has a higher NPV and Project A has a higher IRR, indicating differing preferences based on the criterion. |
| 4 | Calculate the IRR and NPV for a project with an initial cost of $1,000 and cash inflows of $300 annually for 5 years, with a 12% cost of capital. | IRR = 15% NPV = $72.71 | The project has an IRR of 15% and a positive NPV, suggesting it is financially viable. |
| 5 | Determine the IRR and MIRR for a project with a $65,000 cost and expected cash inflows of $12,000 annually for 9 years, with a 10% cost of capital. | IRR = 12% MIRR = 11% | The project’s IRR is 12%, while the MIRR, accounting for reinvestment rate, is slightly lower at 11%. |
| 6 | Compare NPV, IRR, and MIRR as capital budgeting methods. | NPV, IRR, and MIRR offer different perspectives on project value, with MIRR providing a comprehensive assessment over time. |
BUS FPX 3062 Assessment 5 Capital Budgeting
Get Capella University Free Business Samples
BUS FPX 3007
[catlist name="BUSFPX3007"]
BUS FPX 3011
[catlist name="BUSFPX3011"]
BUS FPX 3021
[catlist name="BUSFPX3021"]
BUS FPX 3022
[catlist name="BUSFPX3022"]
BUS FPX 3030
[catlist name="BUSFPX3030"]
BUS FPX 3040
[catlist name="BUSFPX3040"]
BUS FPX 3050
[catlist name="BUSFPX3050"]
BUS FPX 4012
[catlist name="BUSFPX4012"]