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“Please help with part (b) of attached problem. Please show calculations in excel. Thank… 1 answer below » “Please help with part (b) of attached problem. Please show calculations in excel. Thank You. Problem #7 Solution: a) Year 0 1 2 3 4 CF 17.5 6.1 7.4 7 5.5 PVIF @ 20% 1 0.8333 0.6944 0.5787 0.4823 NPV = PV 17.5 5.0833 5.1389 4.0509 2.6524 0.5745 Since the NPV is negative, the company should not proceed with the development of the product. b) Year 0 1 2 3 4 CF 17.5 6.1 7.4 7 5.5 PVIF @ 15% 1 0.86956522 0.75614367 0.65751623 0.57175325 NPV = PV 17.5 5.3043 5.5955 4.6026 3.1446 1.1471 Since the NPV is negative, the company should proceed with the development of the product. Hence, the View complete question » “Please help with part (b) of attached problem. Please show calculations in excel. Thank You. Problem #7 Solution: a) Year 0 1 2 3 4 CF 17.5 6.1 7.4 7 5.5 PVIF @ 20% 1 0.8333 0.6944 0.5787 0.4823 NPV = PV 17.5 5.0833 5.1389 4.0509 2.6524 0.5745 Since the NPV is negative, the company should not proceed with the development of the product. b) Year 0 1 2 3 4 CF 17.5 6.1 7.4 7 5.5 PVIF @ 15% 1 0.86956522 0.75614367 0.65751623 0.57175325 NPV = PV 17.5 5.3043 5.5955 4.6026 3.1446 1.1471 Since the NPV is negative, the company should proceed with the development of the product. Hence, the decision changes. Document Preview: Sheet1
Problem #7
Solution:
Year
CF
PVIF @ 20%
PV
a)
NPV =
b)
PVIF @ 15%
Since the NPV is negative, the company should not proceed with the development of the product.
Since the NPV is negative, the company should proceed with the development of the product.
Hence, the decision changes.
0.00
-17.50
1.00
1.00
1.20
-17.50
1.00
6.10
0.83
1.00
1.20
5.08
2.00
7.40
0.69
1.00
1.20
5.14
3.00
7.00
0.58
1.00
1.20
4.05
4.00
5.50
0.48
1.00
1.20
2.65
-0.57
0.00
-17.50
1.00
1.00
1.15
-17.50
1.00
6.10
0.87
1.00
1.15
5.30
2.00
7.40
0.76
1.00
1.15
5.60
3.00
7.00
0.66
1.00
1.15
4.60
4.00
5.50
0.57
1.00
1.15
3.15
1.15
Sheet1
Problem #7
Solution:
Year
CF
PVIF @ 20%
PV
a)
NPV =
b)
PVIF @ 15%
Since the NPV is negative, the company should not proceed with the development of the product.
Since the NPV is negative, the company should proceed with the development of the product.
Hence, the decision changes.
0.00
-17.50
1.00
1.00
1.20
-17.50
1.00
6.10
0.83
1.00
1.20
5.08
2.00
7.40
0.69
1.00
1.20
5.14
3.00
7.00
0.58
1.00
1.20
4.05
4.00
5.50
0.48
1.00
1.20
2.65
-0.57
0.00
-17.50
1.00
1.00
1.15
-17.50
1.00
6.10
0.87
1.00
1.15
5.30
2.00
7.40
0.76
1.00
1.15
5.60
3.00
7.00
0.66
1.00
1.15
4.60
4.00
5.50
0.57
1.00
1.15
3.15
1.15 Attachments: Q.-Attachment….xls View less » Sep 07 2015 01:54 PM
