Problem #1: Feasibility Analysis
The purpose of this exercise is for each student to individually practice economic feasibility analysis via M.S. Excel.
Scenario: A company is trying to decide between two projects. Available data about the projects is shown below. Conduct an economic feasibility analysis (based on NPV, ROI and payback period) and recommend which project should be selected. The company can only invest in one project. You need to do this analysis in M.S. Excel (please show all calculations using formulas and make sure you professionally format your results). Cost of capital is 12%.
PROJECT A
Year
Investment
Revenue Streams
0
$250,000
1
$30,000
$125,000
2
$30,000
$120,000
3
$30,000
$100,000
4
$30,000
$100,000
5
$30,000
$100,000
6
$30,000
$100,000
PROJECT B
Year
Investment
Revenue Streams
0
$400,000
1
$50,000
$175,000
2
$50,000
$175,000
3
$50,000
$160,000
4
$50,000
$155,000
5
$50,000
$150,000
Notes:
Feasibility analysis must be done with M.S. Excel.
For each calculated result, there has to be an embedded formula.
Please plan to submit a very professional looking Excel document (use proper labels, colors, lines etc).
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