FNCE 623 Financial Management Individual assignment Belgravia Petroleum Inc. is trying to evaluate a generationproject with the following cash flows: Year Cashflow 0-$300,000,000 1 $63,000,000 2 $85,000,000 3 - $50,000,000 4$145,000,000 5 $175,000,000 6 - $50,000,000 7 $70,000,000 8 $72,000,000 Construct a spreadsheet and calculatethe following (the required rate of return is 12 %): Payback period Discounted payback period Internal rate of return (IRR) Modified IRR The discounting approach The reinvestment approach The combination approach Net present value (NPV) Based on your analysis, should the company take the project? Why? IMPORTANT: Use MS Excel functions (PV, FV, NPV, and IRR) in your spreadsheet.

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Answered: FNCE 623 - Financial Management…

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 9EP

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8:07 Sales in quantity and value including total value. Production in quantities. Material usage in quantities Material purchases in quantity and value, including total value. (i) (ii) (iii) (iv) QUESTION TWO Bakasha Limited has estimated the expected cash flows for two possible projects Project Year 3 5 (500) 200 (400) 100 200 300 200 200 2 100 100 100 500 All figures are in GH¢*000 Required Rank these projects in order of acceptability using: Payback Net present value at 20% cost of capital Profitability Index (а) (4 marks) (8 marks) (4marks) (i) (ii) (iii) Explain briefly two advantages and two disadvantages of the payback. (4 marks) (20 MARKS) (b) Scanned with CamScanner

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