Cash Flows and Project Viability in MS Excel



I took a test and got the answer wrong even on the second attempt. Please help!!!!!
“Walmart is considering opening a small experimental store in New York city. A store is expected to have a long economic life, but the valuation horizon is 10 years. The store in New York is likely to generate revenues of $33M in the first year and then it grows at 5%. but the costs of running the business is high because the margins on all the products sold are low (it is a volume business!) The cost of…

3 thoughts on “Cash Flows and Project Viability in MS Excel

  1. I don't not understand this questions please help  saimaAssume that you observed the difficulty with which people harvesting dead wood works using axes. You have seen an opportunity to buy a chain saw in order to harvest your wood faster and thus to make more money. The following are the financial information regarding the envisaged investment: 
    Purchase price of chain saw N$ 5,000.00 Purchase price of other protective equipment N$ 1,000.00 Depreciation life 5 years Depreciation method SOYD Value of chain saw after 5 years N$ 500.00 Value of protective equipment after 5 years N$ 0 Harvesting fees/levy as %  of income 5% Discount rate 12% Annual cash income (subject to annual increase of 6% due to inflation) N$ 90,000.00 Opportunity cost of family labour (Operator) per month N$ 2,000.00 Fuel & Lubricant Costs per annum N$ 10,000.00 Insurance (Operator) per month  N$ 300.00
      Required: (a) Create five year cash-flows for the envisaged investment and calculate the NPV.   [12] (b) Calculate the IRR for this investment.       [12] (c) Based on (a) and (b) above would you consider this investment viable.    [4]

Leave a Reply

Your email address will not be published. Required fields are marked *