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QUESTION

Create a time value of money Excel spreadsheet for the following two investments: Initial investment ($100,000); Forecasts:

Create a time value of money Excel spreadsheet for the following two investments:

A. Initial investment ($100,000); Forecasts: Year 1 payback ($25,000); Year 2 payback ($25,000); Year 3 payback ($25,000)

B. Initial investment ($100,000); Forecasts: Year 1 payback ($20,000); Year 2 payback ($25,000); Year 3 payback ($40,000)

Use a re-investment rate of 10%. Calculate Net Present Value (=NPV) for each investment and specify which investment is the most profitable. (You are not required to use the Excel (=NPV) formula but you will find it to be the easiest and most accurate means of calculating Net Present Value.)

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