Belgravia Petroleum Inc. is trying to evaluate a generation project with the following cash flows: Year Cashflow 0 -$300,000,000 1 $63,000,000 2 $85,000,000 3 -$50,000,000 4 $145,000,000 5 $175,000,000 6 -$50,000,000 7 $70,000,000 8 $72,000,000 Construct a spreadsheet and calculate the following (the required rate of return is 12%): Payback period Discounted payback period Modified IRR The discounting approach The reinvestment approach The combination approach Net present value (NPV) Based on your analysis, should the company take the project? Why? IMPORTANT: Use MS Excel functions (PV, FV, NPV, and IRR) in your spreads please show answer the answer on Excel and full description on Excel sheet
FNCE 623 –
Individual assignment
Belgravia Petroleum Inc. is trying to evaluate a generation project with the following cash flows:
Year
Cashflow
0
-$300,000,000
1
$63,000,000
2
$85,000,000
3
-$50,000,000
4
$145,000,000
5
$175,000,000
6
-$50,000,000
7
$70,000,000
8
$72,000,000
Construct a spreadsheet and calculate the following (the required rate of return is 12%):
Payback period
Discounted payback period
Modified
The discounting approach
The reinvestment approach
The combination approach
Based on your analysis, should the company take the project? Why?
IMPORTANT: Use MS Excel functions (PV, FV, NPV, and IRR) in your spreads
please show answer the answer on Excel and full description on Excel sheet
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