Posted: September 10th, 2021

assignment week 10

Question description

There
are three (3) types of textbook based homework items located at the end
of each chapter. These include Discussion Questions (DQ), Exercises
(E), and Problems (P). Some homework items have been custom created.
Complete the following homework scenario:
Required:Compare the results of the three (3) methods by quality
of information for decision making. Using what you have learned about
the three (3) methods, identify the best project by the criteria of long
term increase in value. (You do not need to do further research.)
Convey your understanding of the Time Value of Money principles used or
not used in the three (3) methods. Review the video titled “NPV, IRR,
MIRR for Mac and PC Excel” (located at https://www.youtube.com/watch?v=C7CryVgFbBc and previously listed in Week 4) to help you understand the foundational concepts: Scenario Information:Assume
that two gas stations are for sale with the following cash flows; CF1
is the Cash Flow in the first year, and CF2 is the Cash Flow in the
second year. This is the time line and data used in calculating the
Payback Period, Net Present Value, and Internal Rate of Return. The
calculations are done for you. Your task is to select the best project
and explain your decision. The methods are presented and the decision
each indicates is given below.

Investment
Sales Price
CF1
CF2

Gas Station A
$50,000
$0
$100,000

Gas Station B
$50,000
$50,000
$25,000

Three (3) Capital Budgeting Methods are presented:Payback Period: Gas Station A is paid back in 2
years; CF1 in year 1, and CF2 in year 2. Gas Station B is paid back in
one (1) year. According to the payback period, when given the choice
between two mutually exclusive projects, the investment paid back in the
shortest time is selected.Net Present Value: Consider the gas station example above under the NPV method, and a discount rate of 10%:NPVgas station A = $100,000/(1+.10)2 – $50,000 = $32,644NPVgas station B = $50,000/(1+.10) + $25,000/(1+.10)2 – $50,000 = $16,115Internal Rate of Return: Assuming 10% is the cost of funds; the IRR for Station A is 41.421%.; for Station B, 36.602.Summary of the Three (3) Methods:
Gas Station B should be selected, as the investment is returned in 1 period rather than 2 periods required for Gas Station A.Under the NPV criteria, however, the decision favors gas station A,
as it has the higher net present value. NPV is a measure of the value of
the investment.The IRR method favors Gas Station A. as it has a higher return, exceeding the cost of funds (10%) by the highest return.

Homework 2 STOCK Journal

Click the link above for more information and then click Create Journal Entry at the top-left of the next screen to submit your journal entry.
Record the current price of the stock for each company you selected in Week 3’s Stock Journal. You
may use any price during this week (e.g., day one price, the opening,
the low, the high, the close, or any price you find when you check it
during the day). Using a MS Excel spreadsheet or MS Word document, put
your Week 8 and Week 10 stock prices side-by-side, to show the
comparison. Determine the total value of your investment.Provide your final opinion / assessment of your investments. Did you make money or lose money? Discuss your results and, based on hindsight, describe what you would do differently.Discuss what you learned from this assignment. Do you believe this assignment will help you in the future in any way?

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