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Template Worksheet For Capital Budgeting Part 1

The document presents the cash flow and net present value analyses of two projects, Project A and Project B, over a 5 year period using a 10% discount rate. Project A has a higher net investment of $8.5 million compared to $1 million for Project B. The net present value for Project A is -$7.38 million, while Project B has a positive NPV of $82,483.

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Russiell Dano
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59 views

Template Worksheet For Capital Budgeting Part 1

The document presents the cash flow and net present value analyses of two projects, Project A and Project B, over a 5 year period using a 10% discount rate. Project A has a higher net investment of $8.5 million compared to $1 million for Project B. The net present value for Project A is -$7.38 million, while Project B has a positive NPV of $82,483.

Uploaded by

Russiell Dano
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Net Investment Year 1 Year 2 Year 3 Year 4

Project A 8,500,000 150,000 200,000 150,000 300,000


Project B 1,000,000 500,000 300,000 200,000 200,000

Discount Rate 10%

PROJECT A PROJECT B
Period Cash Flows PV Factor Present Value Period
1 150,000 0.9091 136,364 1
2 200,000 0.8264 165,289 2
3 150,000 0.7513 112,697 3
4 300,000 0.6830 204,904 4
5 800,000 0.6209 496,737 5
PV of Cash Flows 1,115,991 PV of Cash Flows
Net Investment 8,500,000 Net Investment
Net Present Value - 7,384,009 Net Present Value
Year 5 NPV
800,000 -7,384,009 =NPV(D7,D4:H4)-C4
150,000 82,483 =NPV(D7,D5:H5)-C5

ROJECT B
Cash Flows PV Factor Present Value
500,000 0.9091 454,545
300,000 0.8264 247,934
200,000 0.7513 150,263
200,000 0.6830 136,603
150,000 0.6209 93,138
V of Cash Flows 1,082,483
et Investment 8,500,000
et Present Value - 7,417,517
Net Investment Year 1 Year 2 Year 3 Year 4
Project A 1,000,000 150,000 200,000 150,000 300,000
Project B 1,000,000 500,000 300,000 200,000 200,000

Discount Rate 10%

PROJECT A PROJECT B
Period Cash Flows PV Factor Present Value Period
1 150,000 0.9091 136,364 1
2 200,000 0.8264 165,289 2
3 150,000 0.7513 112,697 3
4 300,000 0.6830 204,904 4
5 800,000 0.6209 496,737 5
PV of Cash Flows 1,115,991 PV of Cash Flows
Net Investment 1,000,000 Net Investment
Net Present Value 115,991 Net Present Value
Year 5 NPV
800,000 115,991 =NPV(D7,D4:H4)-C4
150,000 82,483 =NPV(D7,D5:H5)-C5

ROJECT B
Cash Flows PV Factor Present Value
500,000 0.9091 454,545
300,000 0.8264 247,934
200,000 0.7513 150,263
200,000 0.6830 136,603
150,000 0.6209 93,138
V of Cash Flows 1,082,483
et Investment 1,000,000
et Present Value 82,483
Net Investment Year 1 Year 2 Year 3 Year 4
Project A 1,000,000 150,000 200,000 150,000 300,000
Project B 1,000,000 500,000 300,000 200,000 200,000

Discount Rate 10%

PROJECT A PROJECT B
Period Cash Flows PV Factor Present Value Period
1 150,000 0.9091 136,364 1
2 200,000 0.8264 165,289 2
3 150,000 0.7513 112,697 3
4 300,000 0.6830 204,904 4
5 800,000 0.6209 496,737 5
PV of Cash Flows 1,115,991 PV of Cash Flows
Net Investment 1,000,000 Net Investment
Profitability Index 1.12 Profitability Index
Year 5
800,000
150,000

ROJECT B
Cash Flows PV Factor Present Value
500,000 0.9091 454,545
300,000 0.8264 247,934
200,000 0.7513 150,263
200,000 0.6830 136,603
150,000 0.6209 93,138
V of Cash Flows 1,082,483
et Investment 1,000,000
ofitability Index 1.08
Net Investment Year 1 Year 2 Year 3 Year 4
Project A -1,000,000 150,000 200,000 150,000 300,000
Project B -1,000,000 500,000 300,000 200,000 200,000

PROJECT A PROJECT B
Internal Rate of Return 13.36% Internal Rate of R

Period Cash Flows PV Factor Present Value Period


0 -1,000,000 1.0000 - 1,000,000 0
1 150,000 0.8822 132,323 1
2 200,000 0.7782 155,640 2
3 150,000 0.6865 102,974 3
4 300,000 0.6056 181,679 4
5 800,000 0.5342 427,384 5
PV of Cash Flows 1,000,000 PV of Cash Flows
Net Investment - 1,000,000 Net Investment
Net Present Value - Net Present Value
Year 5 IRR
800,000 13.36% =IRR(C4:H4)
150,000 14.04% =IRR(C5:H5)

ROJECT B
Internal Rate of Return 14.04%

Cash Flows PV Factor Present Value


-1,000,000 1.0000 - 1,000,000
500,000 0.8769 438,444
300,000 0.7689 230,680
200,000 0.6743 134,854
200,000 0.5913 118,252
150,000 0.5185 77,770
V of Cash Flows 1,000,000
et Investment - 1,000,000
et Present Value -
Net Investment Year 1 Year 2 Year 3 Year 4
Project A -1,000,000 150,000 200,000 150,000 300,000
Project B -1,000,000 500,000 300,000 200,000 200,000

PROJECT A PROJECT B
Reinvesting and Financing Rate 10.00% Reinvesting and Financin

Period Cash Flows FV Factors Future Value Period


1 150,000 1.4641 219,615 1
2 200,000 1.3310 266,200 2
3 150,000 1.2100 181,500 3
4 300,000 1.1000 330,000 4
5 800,000 1.0000 800,000 5
Terminal Value 1,797,315 Terminal Value
Net Investment - 1,000,000 Net Investment
MIRR 12.44% MIRR
Year 5 MIRR
800,000 12.44% =MIRR(C4:H4,E8,E8)
150,000 11.76% =MIRR(C5:H5,E8,E8)

ROJECT B
Reinvesting and Financing Rate 10.00%

Cash Flows PV Factor Future Value


500,000 1.4641 732,050
300,000 1.3310 399,300
200,000 1.2100 242,000
200,000 1.1000 220,000
150,000 1.0000 150,000
erminal Value 1,743,350
et Investment - 1,000,000
11.76%
Net Investment Year 1 Year 2 Year 3 Year 4
Project A 1,000,000 150,000 200,000 150,000 300,000
Project B 1,000,000 500,000 300,000 200,000 200,000

PROJECT A PROJECT B
Discount Rate 10.00% Di

Period Cash Flows Cumulative CF Not Recovered Period


0 -1,000,000 - 1,000,000 0
1 150,000 150,000 - 850,000 1
2 200,000 350,000 - 650,000 2
3 150,000 500,000 - 500,000 3
4 300,000 800,000 - 200,000 4
5 800,000 1,600,000 600,000 5

Payback Period 4.25 Payback Period


=B15+ABS(E15/C16) =G13+ABS(J13/H14)

Payback Period 4.25 Payback Period


=PERCENTRANK.INC(E11:E16,0,3)*MAX(B11:B16) =PERCENTRANK.INC(J11:J16,0,3
Year 5
800,000
150,000

ROJECT B
Discount Rate 10.00%

Cash Flows Cumulative CF Not Recovered


-1,000,000 - 1,000,000
500,000 500,000 - 500,000
300,000 800,000 - 200,000
200,000 1,000,000 -
200,000 1,200,000 200,000
150,000 1,350,000 350,000

yback Period 3.00


G13+ABS(J13/H14)

yback Period 3.00


PERCENTRANK.INC(J11:J16,0,3)*MAX(G11:G16)
Net Investment Year 1 Year 2 Year 3 Year 4
Project A 1,000,000 150,000 200,000 150,000 300,000
Project B 1,000,000 500,000 300,000 200,000 200,000

PROJECT A
Discount Rate 10.00%

Period Cash Flows PV Factor Discounted CF Cumulative DCF Not Recovered


0 -1,000,000 1.00 - 1,000,000
1 150,000 0.91 136,363.64 136,364 - 863,636
2 200,000 0.83 165,289.26 301,653 - 698,347
3 150,000 0.75 112,697.22 414,350 - 585,650
4 300,000 0.68 204,904.04 619,254 - 380,746
5 800,000 0.62 496,737.06 1,115,991 115,991

Payback Period 4.77


=B15+ABS(G15/E16)

Payback Period 4.77


=PERCENTRANK.INC(G11:G16,0,3)*MAX(B11:B16)
Year 5
800,000
150,000

PROJECT A
Discount Rate 10.00%

Period Cash Flows PV Factor Discounted CFCumulative DCFNot Recovered


0 -1,000,000 1.00 -1,000,000.00 - 1,000,000
1 500,000 0.91 454,545.45 454,545 - 545,455
2 300,000 0.83 247,933.88 702,479 - 297,521
3 200,000 0.75 150,262.96 852,742 - 147,258
4 200,000 0.68 136,602.69 989,345 - 10,655
5 150,000 0.62 93,138.20 1,082,483 82,483

Payback Period 4.11


=I15+ABS(N15/L16)

Payback Period 4.11


=PERCENTRANK.INC(N11:N16,0,3)*MAX(I11:I16)
Project A Project B
Net Present Value 115,991 82,483
Profitability Index 1.12 1.08
Internal Rate of Return 13.36% 14.04%
Modified Internal Rate of Return 12.44% 11.76%
Payback Period 4.25 3.00
Discounted Payback Period 4.77 4.11

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