Fin 100 Assignmnet NPV, IRR, MIRR for Mac and PC Excel, business and finance homework help

PLEASE NOTE THE UNDERLINE. PER MY PROFESSOR,

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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 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		$100,000
  Gas Station B	$50,000	$50,000	$25,000

  Three (3) Capital Budgeting Methods
  are presented:

  1. 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.
  2. Net Present Value: Consider the gas station example above
     under the NPV method, and a discount rate of 10%:
     NPV_{gas station A}
     = $100,000/(1+.10)² – $50,000 =
     $32,644
     NPV_{gas station B} = $50,000/(1+.10) +
     $25,000/(1+.10)² – $50,000 = $16,115
  3. Internal 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