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  • Scenario Summary: Changing Cells

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    Vamshi Krishna Mallela
    14 views8 pages
    This document contains information about two investment options, including changing variables, cash flows over 5 years, internal rates of return (IRR), net present values (NPV) at different discount rates, and conclusions. Option A has a 13% discount rate and $1600 initial cash flow, while Option B has 15% and $1850. Option B has a higher IRR of 16% compared to Option A's 14%, but Option A has a higher NPV, indicating it is preferable according to the NPV decision rule. Graphs show NPVs at different discount rates for each option.

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    excel spread sheet a sample business modelling

    Original Title

    Solution

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    This document contains information about two investment options, including changing variables, cash flows over 5 years, internal rates of return (IRR), net present values (NPV) at different discount rates, and conclusions. Option A has a 13% discount rate and $1600 initial cash flow, while Option B has 15% and $1850. Option B has a higher IRR of 16% compared to Option A's 14%, but Option A has a higher NPV, indicating it is preferable according to the NPV decision rule. Graphs show NPVs at different discount rates for each option.

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    © All Rights Reserved
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    14 views8 pages

    Scenario Summary: Changing Cells

    Uploaded by

    Vamshi Krishna Mallela
    This document contains information about two investment options, including changing variables, cash flows over 5 years, internal rates of return (IRR), net present values (NPV) at different discount rates, and conclusions. Option A has a 13% discount rate and $1600 initial cash flow, while Option B has 15% and $1850. Option B has a higher IRR of 16% compared to Option A's 14%, but Option A has a higher NPV, indicating it is preferable according to the NPV decision rule. Graphs show NPVs at different discount rates for each option.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 8

    Scenario Summary

    Current Values:

    increase

    Changing Cells:
    $E$4
    13%
    15%
    $F$4
    15%
    17%
    $E$5
    1600
    1600
    $F$5
    1850
    1850
    Result Cells:
    $J$17
    57.50978532 -22.76631311
    $K$17
    47.42272902 -31.14100001
    Notes: Current Values column represents values of changing cells at
    time Scenario Summary Report was created. Changing cells for each
    scenario are highlighted in gray.

    Scenario Summary
    normal

    increase

    decrease

    Changing Cells:
    $E$4
    13%
    15%
    11%
    $F$4
    15%
    17%
    13%
    $E$5
    1600
    1600
    1600
    $F$5
    1850
    1850
    1850
    Result Cells:
    $J$17
    57.50978532 -22.76631311 144.3088594
    $K$17
    47.42272902 -31.14100001 131.8813724
    Notes: Current Values column represents values of changing cells at
    time Scenario Summary Report was created. Changing cells for each
    scenario are highlighted in gray.

    changing variables

    option A option B
    13%
    15%
    1600
    1850

    discount rate
    initial cash flow

    year
    0
    1
    2
    3
    4
    5
    IRR
    RANKING

    option A option B
    cash flow cash flow
    -1600
    -1850
    350
    675
    475
    575
    625
    725
    575
    350
    350
    400
    14%
    2

    16%
    1

    objective

    Based on IRR rule, Option B is preferable having larger IRR.(IRR is not concerne
    Based on NPV rule, option A is preferable having larger NPV.

    57.50979
    -1400
    -1500
    -1600
    -1700
    -1800

    11%
    12%
    13%
    344.3089 300.052 257.5098
    244.3089 200.052 157.5098
    144.3089 100.052 57.50979
    44.30886 0.052041 -42.4902
    -55.6911
    -99.948
    -142.49

    47.42273
    -1650
    -1750
    -1850
    -1950
    -2050

    13%
    331.8814
    231.8814
    131.8814
    31.88137
    -68.1186

    14%
    15%
    288.879 247.4227
    188.879 147.4227
    88.879 47.42273
    -11.121 -52.5773
    -111.121 -152.577

    cash flows

    1000

    0-1000

    0
    -1000

    -1000-0
    2

    -2000
    -3000

    NPV

    -2000--1000
    5

    -3000--2000

    year
    0
    1
    2
    3
    4
    5
    NPV
    RANKING

    option A
    option B
    present value present value
    -1600
    -1850
    $309.73 $586.96
    $371.99 $434.78
    $433.16 $476.70
    $352.66 $200.11
    $189.97 $198.87

    57.50979
    11% 144.3089
    12% 100.052
    13% 57.50979
    14% 16.59701
    15% -22.7663

    57.50978532 47.42273
    1
    2

    13%
    14%
    15%
    16%
    17%

    160
    140
    120
    100
    N
    P
    V

    80
    60
    40
    20

    ng larger IRR.(IRR is not concerned about the cost of capital while ranking projects)
    ing larger NPV.

    0
    11%

    -20
    -40

    14%
    15%
    216.597 177.2336869
    116.597 77.23368689
    16.59701 -22.76631311
    -83.403 -122.7663131
    -183.403 -222.7663131

    160
    140
    120
    100

    16%
    17%
    207.4391
    168.859
    107.4391 68.85899999
    7.439124 -31.14100001
    -92.5609
    -131.141
    -192.561
    -231.141

    N
    P
    V

    80
    60
    40
    20
    0
    -20
    -40

    1000

    13%

    0
    0-1000
    -1000-0
    -2000--1000

    -1000
    1

    -3000--2000

    NPV

    -2000

    cash flows

    1000

    47.42273
    131.8814
    88.879
    47.42273
    7.439124
    -31.141

    57.50978532

    57.50978532

    12%

    13%

    14%

    15%

    discount rates

    47.42272902

    47.42272902

    13%

    14%

    15%
    discount rate

    16%

    17%

    cash flows

    0-1000
    -1000-0
    -2000--1000

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