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Complete the steps below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you need. To copy/paste a formula across a row or down a column, an absolute cell reference or a mixed cell reference may be preferred. If a specific Excel function is to be used, the directions will specify the use of that function. Do not type in numerical data into a cell or function. Instead, make a reference to the cell in which the data is found. Make your computations only in the blue cells highlighted below. In all cases, unless otherwise directed, use the earliest appearance of the data in your formulas, usually the Given Data section.

Start Excel. Download and open the workbook named:
Berk_DeMarzo_Problem_7-7_Start.

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In cell range E19:E39, by using cell references and the function PV, calculate the NPV of the investment opportunity for cost of capital 0%:20%, respectively.

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In cells C41:F52, insert a Line Chart to plot the NPV profile of the investment opportunity.

Inserting a Chart
On the Insert tab, in the Charts group, click the arrow next to Insert Line or Area Chart and choose Line Chart.

Selecting Data Series
Then in Select Data Source window, delete any series created automatically.
Add new series for the NPV profile of the investment opportunity using cells E19:E39 for the series values. Do not name the series.

Edit Chart Elements
Then in Select Data Source window, edit Horizontal Axis Labels using cells D19:D39.
Add a chart title and choose the Above Chart option. Replace Chart Title with NPV Profile. Add axis titles. Replace Axis Title for the horizontal axis with Cost of Capital and Axis Title for the vertical axis with NPV (million).
 

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In cell E56, by using cell references and the function RATE, calculate the IRR of the investment opportunity.

Note: Do not enter any value for the Guess argument of the function RATE.
 

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In cell E60, select Yes or No depending on whether you would take the opportunity or not.
 

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In cell E64, by using cell references, calculate the maximum deviation allowable in the cost of capital estimate to leave the decision in (c) unchanged.
 

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Save the workbook. Close the workbook and then exit Excel. Submit the workbook as directed.
 

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