FIN301 Principles of Finance
Module 4 Case
CAPITAL BUDGETING AND CAPITAL STRUCTURE
Questions 1 and 2 for this assignment are computational in nature and require the use of Microsoft Excel. Questions 3 and 4 are conceptual in nature and do not require computations. Make sure to thoroughly review the required background readings and work through both the concepts and the computational examples. The videos on computing NPV and IRR using Excel along with the sample spreadsheet should also help. If you are unable to figure out how to make the computations in Excel, then you can get partial credit by computing the answers using a calculator and thoroughly explaining your steps. For conceptual questions, make sure to thoroughly explain the reasoning for your answers and to use references from the required background readings.
Submit your answers to the following questions in a Word document, and also submit an Excel file with your computations for Questions 1 and 2:
The table below gives the initial investment (the negative numbers at “Year 0”) for two projects. Compute the payback period, the NPV, and the IRR using Excel. Then rank the two projects based on each of these three criteria, and discuss which projects should be funded based on your computations.