Assignment:
Your company is considering three potential projects, and as the financial analyst, you have been asked to evaluate the projects using Net Present Value (NPV). Each project requires an initial investment and is expected to generate cash flows over the next five years. The company's required rate of return (discount rate) is 10% for project A, 15% for project B, and 20% for project C.
Your task is to use Excel to do the following:
1. Calculate the NPV for each project. Need Assignment Help?
2. Recommend which project the company should invest in based on your findings.
3. Justify your selection using the calculated NPV
Data:
| Project |
Initial Investment |
Year 1 Cash Flow |
Year 2 Cash Flow |
Year 3 Cash Flow |
Year 4 Cash Flow |
Year 5 Cash Flow |
| Project A |
($200,000) |
$50,000 |
$60,000 |
$70,000 |
$80,000 |
$90,000 |
| Project B |
($250,000) |
$80,000 |
$90,000 |
$100,000 |
$110,000 |
$120,000 |
| Project C |
($300,000) |
$100,000 |
$110,000 |
$120,000 |
$130,000 |
$140,000 |