Suppose you are consultant for a farmer who owns 100 acres of usable land. She is going to plant some combination of corn and wheat on the land. She wants you to build a spreadsheet that will calculate NPV and IRR based on her best guesses about the costs and revenues related to this project.
Create an NPV analysis template with the following characteristics: "ROI" Tab
•Create input cell for required return
•Label year columns from zero to ten
•Label cash flow rows as follows ?Capital investment ?Expenses ?Revenue ?Net cash flow
•Create dynamic calculations for each year/cash flow type combination using data from Assumptions tab
•Use excel formulas to calculate NPV and IRR based on the net cash flows
•Use conditional formatting to indicate when the NPV and IRR indicate a good investment "Assumptions" Tab
•Create input cells for the following
?Acres - corn
?Acres - wheat
?Capital investment - corn
?Capital investment - wheat
?Year 1 corn expense/acre
?Corn expense annual increase (%)
?Year 1 wheat expense/acre
?Wheat expense annual increase (%)
?Year 1 corn revenue/acre
?Corn revenue annual increase (%)
?Year 1 wheat revenue/acre
?Wheat revenue annual increase (%)