Unit VII Assessment (capital budgeting)

Unit VII Assessment
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PART 1
Various formal methods are usable in capital budgeting and in ensuring that suitable decisions are made in establishing viable projects to invest. These analysis methods are; Net Present value (NPV), Internal Rate of Return (IRR) and Payback Period (PBP).
NPV is usable in estimating the value of potential project through valuation of discounted cash flow. On the other hand, the International rate of return abbreviated is the rate of discount that offers a zero to the net present value. This is regularly fit for measuring the efficiency of investment. Last, the payback period refers to time needed for the return on a certain investment in order to repay the amount of the initial investment. Therefore, in this paper, I will analyze 3 projects and rank them according to viability and later make decisions.
PROJECT 1YEAR Cash flow in $  Cumulative cash flow Discount rate@5% Present Value=Cash flow*Discount rate 1 100,000.00  100,000.00 0.9524 95,240.00 2 100,000.00  200,000.00 0.9070 90,700.00 3 100,000.00  300,000.00 0.8638 86,380.00 4 100,000.00  400,000.00 0.8227 82,270.00 5 100,000.00  500,000.00 0.7835 78,350.00 6 50,000.00  550,000.00 0.7462 37,310.00 7 50,000.00  600,000.00 0.7107 35,535.00 8 50,000.00  650,000.00 0.6768 33,840.00 9 50,000.00  700,000.00 0.6446 32,230.00 10 50,000.00  750,000.00 0.6139 30,695.00 TOTAL PRESENT VALUE 602,550.00 Less Initial Invest500,000.00 NPV 102,550.00 
Net Present Value= $ 102,550.00
Pay Back Period=5 years
IRR=10% as illustrated below that makes NPV zero or Near 0
YearAssume a Discount rate of 10%  Present value@10% 10.9091 90,910.00 20.8264 82,640.00 30.7513 75,130.00 40.683 68,300.00 50.6209 62,090.00 60.5645 28,225.00 70.5132 25,660.00 80.4655 23,275.00 90.4241 21,205.00 100.3855 19,275.00 YearTOTAL PRESENT VALUE 496,710.00 1Less Initial Invest 500,000.00 2NPV (3,290.00)
PROJECT 2Year Cash flow in $  Cumulative cash flow Discount rate@5% Present Value=Cash flow*Discount rate 1 400,000.00  400,000.00 0.9524 380,960.00 2 400,000.00  800,000.00 0.9070 362,800.00 3 400,000.00  1,200,000.00 0.8638 345,520.00 4 -  1,200,000.00 0.8227 - 5 -  1,200,000.00 0.7835 - 6 -  1,200,000.00 0.7462 - 7 ...