In September 2022, the chief executive officer (CEO) and founder of Maximum Quality Equipment (Maximum), was trying to decide whether to invest in a joint venture company to operate a quarry that would extract and sell rock armour. The joint venture company, Island Development Corporation (IDC), had secured a 25-year mineral production sharing agreement with the Philippine government. IDC would purchase equipment and extract rock armour in Chiquita Island and then sell the rock armour to San Miguel Corporation (SMC), a major Philippine corporation. The contract was currently under negotiation, with SMC offering a two-year contract and IDC asking for a five-year contract. The CEO asked his chief financial officer to run a discounted cash flow, estimate the cost of capital for the project, and determine the net present value (NPV), internal rate of return (IRR), and project payback. He needed to decide whether he would invest in the project.

Spreadsheet to accompany product W38383.

Student Spreadsheet to accompany product W38382.