Cowboy Exploration, Ltd, plans to replace some aging but still serviceable oil-field equipment now while it still has a salvage value. The company’s investment analyst has made the following estimates New equipment cost, including installation and training lYo-Qoe-= lao $140,000 Salvage value of new equipmentat the end ofits life... (2 Cat... 4.4 Neat + 20,000 |

New equipment useful life... [AO /Y=...

Salvage value of old equipment (equals the old equipment's net book value) (=, Safety, maintenance, and SUPErVISION COSt SAVINGS ......cc.cccccsccsssevsscssvesetecevesesustsevsteeerees Anna OMAN OVACOSESAV IMG Stncee. Meehan cceks en asests Sotatecetaee soMersteeshnntnaledesiaohintoenaecaheels : +. $ 23,000 HRC ORRCM DAIL CW EN ANOREE EM CAT eee IIT w es diel Gmacitst ae. fo ternal den US? cs vs anceaycatouountivaes 30%

1%

I. Build an Excel spreadsheet to create an analysis similar to the pute requirements

(a) and (b).

a. Net present value of the oil-field equipment replacement using the NPV function. F229

b. Internal rate of return of the oil-field equipment replacement using the IRR function. g, 8

c. Would the pojest he financial viable if the ny equipment had ta h