he purpose of this assignment is for students to employ capital budgeting techniques using time value of money concepts to determine the acceptability of large dollar value assets.

Assignment Steps

Scenario: A firm has projected free cash flows of $575,000 for Year 1, $625,000 for Year 2, and 750,000 for Year 3. The projected terminal value at the end of Year 3 is $8,000,000. The firm’s Weighted Average cost of Capital (WACC) is 12.5%.

Create a 350-word Microsoft® Excel® document addressing the following:

  • Determine the Discounted Cash Flow (DCF) value of the firm.
  • Recommend acceptance of this project using net present value criteria.
  • Display your calculations.