Let’s return to the proforma income statement we created for Microsoft’s Z Box (info given below) that we did in Week 2 and complete the analysis to determine if the project is desirable. Using the spreadsheet you constructed in Week 2 and the cost of capital calculations you computed in Week 8 to determine if Microsoft should continue with the Z Box project. Use the following capital budgeting techniques. 1. Payback period 2. Net present value 3. Internal rate of return Now let’s test the sensitivity of the project to some changes in the assumptions. 4. Take the cost of capital you previously computed (in week 8) and add 2% to the value (for example, if WACC was 12%, make it 14%) and recalculate NPV. What happens to IRR? Is the project still desirable? 5. Suppose the cost of goods sold percentage rises by 3%. Compute the payback period, NPV and IRR. Use the original WACC you computed. 6. How sensitive is NPV to the changes made in 4 and 5?

answerbland allison silver purchase act);

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.