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Financial Modeling Capital Budgeting and Initial Investment Worksheet

1. (15 points) Capital Budgeting Firm A is faced with a project Z. Firm A’s WACC is estimated to be 5%. Given the following cash flow schedule for project Z:

	Year	Cash Flow
	0	-1000
	1	300
	2	100
	3	80
	4	90
	5	210
	6	300
	7	180

A. Calculate the Net Present Value for project Z. (5 points)

B. Calculate the IRR for project Z. (5 points)

C. Based on the NPV and IRR you calculated for project Z, what is your investment decision? (5 points)