Reference no: EM13762950
Investment Analysis
Introduction
In this lesson you'll learn how to use EXCEL's built in NPV() and IRR() functions to evaluate an investment opportunity. You will also learn how to use various PMT() functions to evaluate a loan.
Evaluating an Investment
One of the ways project managers evaluate whether or not to take on a project is by doing what is called a Net Present Value (NPV) analysis and calculating the Internal Rate of Return (IRR). These two related measures are useful for comparing the investment it will take to complete the project against an alternative investment.
Net Present Value
The underlying premise of NPV is that a dollar today is worth more than a dollar earned in the future. The reason this is true is because of inflation, which reduces the purchasing power of the dollar over time. For example, something that cost $1.00 in 1980 would cost approximately $2.09 in the year 2000.What this means is that the purchasing power (or worth) of the dollar was half as much in 2000 as it was in 1980.
When taking on a project, a project manager must decide if the expected return from the project in the future is greater than investing in something else or doing nothing at all. Net Present Value aids in making that decision.
Internal Rate of Return
Internal Rate of Return is the rate that will make the NPV equal to zero. Or, put another way, it's the rate of return to make the proposed investment break even with an alternative investment.
The formulas for NPV and IRR are relatively complex. Lucky for us, EXCEL provides the functionality to calculate NPV and IRR for us!
Attachment:- Investment Analysis.rar
|
Differences between taxable and financial income
: Why are there differences between taxable and financial income? What are some examples of permanent and temporary differences? Why do these differences exist? How do they affect the financial statements?
|
|
Important determinant in the elasticity of supply
: Why is time such an important determinant in the elasticity of supply and Is time also important in determining price elasticity of demand? Explain
|
|
Inactions warrant any disciplinary action
: Do you feel your actions or inactions warrant any disciplinary action? Explain. As an individual, do you feel that the scenario described could be or should be defended with something like "I was owed this raise and promotion because of my ability..
|
|
Oracle datatypes for attributes from a normalized relation
: Choose Oracle datatypes for the following attributes from a normalized relation including: Vendor(VendorID, Address, ContactName) Item (ItemID, Description) PriceQuote(VendorID, ItemID, Price) Describe why you selected the datatypes for each attri..
|
|
Calculate npv and irr
: Investment Analysis-The formulas for NPV and IRR are relatively complex. Lucky for us, EXCEL provides the functionality to calculate NPV and IRR for us!
|
|
Analysis of the behaviors of supply chain networks
: Provide an analysis of the behaviors of supply chain networks and supply chain drivers in your memo. Explain how supply chain impacts distribution of assets and resources.
|
|
Which of the following secretions enter the gi tract
: Which of the following secretions enter the GI tract at the duodenum? Choose all that apply.A) PepsinogenB) Sodium bicarbonateC) Bile salts
|
|
Choose a model organism that is an animal
: The main objective of the second essay is to provide you with the opportunity to survey the current literature and explore why scientists use model organisms.1. Choose a model organism that is an animal: Drosophila, C. elegans, zebrafish or mouse. Yo..
|
|
Examples of inventory control systems tools
: Provide 3 examples of inventory control systems tools. Explain what these tools are and how they are used. What are the benefits of each example for managing production of goods and services for the company.
|