Complete the following problems from chapter 10 in the textbook:
• P10-4
• P10-10
• P10-11
• P10-15
• P10-21
• P10-24
Follow these instructions for completing and submitting your assignment:
1. Do all work in Excel. Do not submit Word files or *.pdf files.
2. Submit a single spreadsheet file for this assignment, do not submit multiple files.
3. Place each problem on a separate spreadsheet tab.
4. Label all inputs and outputs and highlight your final answer.
5. Follow the directions in the “Guidelines for Developing Spreadsheets” located in the Course Materials.
6. P10–4 Long-term investment decision, payback method Bill Williams has the opportunity
7. to invest in project A that costs $9,000 today and promises to pay annual end-ofyear
8. payments of $2,200, $2,500, $2,500, $2,000, and $1,800 over the next 5 years.
9. Or, Bill can invest $9,000 in project B that promises to pay annual end-of-year payments
10. of $1,500, $1,500, $1,500, $3,500, and $4,000 over the next 5 years.
11. a. How long will it take for Bill to recoup his initial investment in project A?
12. b. How long will it take for Bill to recoup his initial investment in project B?
13. c. Using the payback period, which project should Bill choose?
14. d. Do you see any problems with his choice?
15. P10–10 NPV: Mutually exclusive projects Hook Industries is considering the replacement of
16. one of its old drill presses. Three alternative replacement presses are under consideration.
17. The relevant cash flows associated with each are shown in the following table.
18. The firm’s cost of capital is 15%.
Press A Press B Press C
Initial investment (CF0) $85,000 $60,000 $130,000
Year (t) Cash inflows (CFt)
1 $18,000 $12,000 $50,000
2
