What’s Required (the Deliverables)
Determine the NPV, IRR, MIRR, Years to Payback, Discounted Years to Payback, Profitability Index,Sensitivity Analysis using a one-way Data Tablewith a properly labeled graph (includes a heading with axes identified and appropriate scale);Two-way Sensitivity Analysis(how does the NPV vary with an input variable of your choice and with the required rate of return using a two-way Data Table, color coded) - use atwo-way Data Tablefor this.
In estimating the terminal value (more properly called the “continuation value”) for this investment, use a multiple of 10.25 instead of 9, as indicated in the case study.
To conclude your analysis, you must answer this question: Based upon the entire analysis (including the sensitivity analysis), do you think the project should be undertaken? Justify your answer.
All of the requirements must be completed usingM.S. Excel. DO NOT USE A WATERED-DOWN VERSION OF EXCEL (if in doubt, check with the instructors). Students must employ the use of a
vertical lookup table
to project out revenues year-by-year. Thecalculationsection MUST belinked to aninputsection, and theoutputsection should also belinked to thecalculationsection. Theorganizationof your spreadsheet must beeasy to follow, and theinput-output sections must be side-by-side at the beginning (top) of the spreadsheet. Students should use adrop-down menuin the input section(use it to specify a revenue table).