Rudberg Manufacturing is evaluating a potential investment in a major new production line. The company has made the foll

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Rudberg Manufacturing Is Evaluating A Potential Investment In A Major New Production Line The Company Has Made The Foll 1 (41.72 KiB) Viewed 46 times

Rudberg Manufacturing Is Evaluating A Potential Investment In A Major New Production Line The Company Has Made The Foll 2 (20.46 KiB) Viewed 46 times

Rudberg Manufacturing Is Evaluating A Potential Investment In A Major New Production Line The Company Has Made The Foll 3 (43.67 KiB) Viewed 46 times

Rudberg Manufacturing Is Evaluating A Potential Investment In A Major New Production Line The Company Has Made The Foll 4 (33.52 KiB) Viewed 46 times

Rudberg Manufacturing is evaluating a potential investment in a major new production line. The company has made the following estimates of the required cash flows of the project: Initial Investment 3 $12,585,000 Operating Cash Flows: Years 1 though 4: = $3,215,000 Years 5 though 7: 5 $2,234,000 Years 8 though 10: 5 $1,579,000 7 Terminal Cash Flow at Year 10 $252,000 3 The investment presents an average level of risk to Rudberg Manufacturing. The Company has a weighted-average cost of capital of 12.2%. 9 10 Required: 11 Compute the net present value (NPV), internal rate of return (IRR), and modified internal rate of return (MIRR) of the investment project. Use the schedules and forms below to preform the supporting calculations. The use cell references to enter 12 the amounts from you analyses in the spaces provided. Indicate whether the project is acceptable to Rudberg Manufacturing based on each measurement computed. 13
Amount Is the project acceptable? Net Present Value (NPV) 3 points Internal Rate of Return Modified Internal Rate of Return (IRR) Complete the table below for each of the years of the project. Be sure to use Excel functions and cell references for all amounts and calculations. Also be sure to professional format all amounts. You may leave a cell blank if it is not relevant to your analysis. 6 points Hurdle Rate
23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 36 Years 1 2 3 4 5 6 7 8 9 10 Cash Flow Investment Project Present Value Future Value $3,215,000 $3,215,000 $3,215,000 $3,215,000 $2,234,000 $2,234,000 $2,234,000 $1,579,000 $1,579,000 $1,831,000
Use the values from your analysis to complete the calculation of NPV PV of Future Cash Flows -Initial Investment Net Present Value Use the NPV function to calculate the project's NPV: NPV Function Use the IRR function to calculate the project's IRRI Internal Rate of Return Use the follow table to enter the relevant values and calculate the project's MIRR nper 10 rate 0.122 PV PMT FV Type 3 points 3 points 3 points 4 points N O R