Instructions For Computer Lab 2 You Should Complete The Cour

Instructions For Computer Lab 2 You Should Complete The Computer Lab

For Computer Lab 2, you should complete the Computer Lab 2 spreadsheet based on the lab instructions. Use your spreadsheet to answer all the questions contained in the lab. You should type the answers to your questions in the section of the course called “Computer Lab 2 Questions.” Note: I have included a spreadsheet with the solutions to aid you. Please attempt the lab without using the solutions first.

Paper For Above instruction

The primary objective of this assignment is to develop proficiency in financial analysis using spreadsheet models, focusing on project evaluation techniques such as Net Present Value (NPV), Internal Rate of Return (IRR), and sensitivity analysis. Through completing two comprehensive projects based on given assumptions and data, students will learn to analyze investment viability, understand depreciation methods, and evaluate the impact of various factors on project profitability.

Part 1 involves a detailed step-by-step construction of a cash flow projection model for a capital investment project. This includes calculating initial investments, depreciation, operating cash flows, working capital changes, and terminal cash flows upon asset disposal. The process culminates in the calculation of the project's NPV and identifying the maximum acceptable initial investment that yields a neutral NPV, utilizing Excel’s Goal Seek function. Students will interpret these results to assess project feasibility under specified assumptions.

Part 2 requires students to independently project cash flows based on provided assumptions for a second project. This involves estimating revenues, operating expenses, depreciation, and salvage value, then calculating the NPV using Excel's functions. Additionally, students will determine IRR employing Goal Seek and verify it with the IRR function. Further, a sensitivity analysis is conducted by altering key assumptions like equipment costs, sales growth, salvage value, and discount rate to examine effects on project profitability. The creation of a data table will visualize NPV variations across different discount rates, integrating advanced Excel skills.

To deepen understanding, students are instructed to modify depreciation methods from MACRS to straight-line, exploring the effects on project valuation. A switch mechanism via a logical IF formula will allow easy comparison between depreciation methods, fostering familiarity with dynamic model features. Throughout, learners will enhance their ability to interpret financial metrics, understand depreciation impacts, and employ Excel for robust financial decision-making.

References

  • Brealey, R. A., Myers, S. C., & Allen, F.. (2017). Principles of Corporate Finance (12th ed.). McGraw-Hill Education.
  • Damodaran, A. (2010). Applied Corporate Finance. John Wiley & Sons.
  • Ross, S. A., Westerfield, R. W., & Jaffe, J. (2016). Corporate Finance (11th ed.). McGraw-Hill Education.
  • Palepu, K. G., & Healy, P. (2018). Business Analysis & Valuation: Using Financial Statements (6th ed.). Cengage Learning.
  • Brigham, E. F., & Ehrhardt, M. C. (2016). Financial Management: Theory & Practice (15th ed.). Cengage Learning.
  • Koller, T., Goedhart, M., & Wessels, D. (2015). Valuation: Measuring and Managing the Value of Companies (6th ed.). Wiley Finance.
  • Gitman, L. J., & Zutter, C. J. (2015). Principles of Managerial Finance (14th ed.). Pearson.
  • Damodaran, A. (2012). Investment valuation: Tools and techniques for determining the value of any asset (3rd ed.). Wiley Finance.
  • Stephens, G., & Kahl, J. (2019). Excel Modeling in Corporate Finance. Harvard Business Review Press.
  • Craig, P. (2009). Financial Statement Analysis and Security Valuation (2nd ed.). CFA Institute Investment Series.

Related Assignments