1 Capital Investment Decisions and the Time Value of Money 2 Compute NPV-equal net cash inflows Woodsy Music is considering investing in private lesson studios that will have no residual value. The 4 studios are expected to result in annual net cash inflows for the next nine years. 1699 Initial investment Annual net cash inflow $625,000 $90,000 9 Use the blue shaded areas on the ENTERANSWERS tab for inputs. Always use cell references and formulas where appropriate to receive full credit. If you 10 copy/paste from the Instructions tab you will be marked wrong. 11 12 Requirements 13 1 What is the internal rate of return (IRR) of the studio investment? 14 a. Enter the investment in cell B3 of the ENTERANSWERS tab as a negative value. b. In cell 84 of the ENTERANSWERS tab, enter the cash flow expected in Year 1. In the next cell below, enter the cash flow expected in Year 2. Continue in the same fashion until all future cash flows are shown in separate cells in the order in which they are expected to be received. Enter cash inflows as positive amounts and cash outflows as negative amounts. 15 16 c. 17 Enter the IRR in cell B13 using the IRR Excel function. 18 Saving & Submitting Solution 19 1 Save file to desktop. a 22858 20 21 Create folder on desktop, and label COMPLETED EXCEL PROJECTS 2 Upload and submit your file to be graded. Navigate back to the activity window screen where you downloaded the initial spreadsheet b. Click Choose button under step 3; locate the file you just saved and click Open a. 23 24 c. Click Upload button under step 3 25 d. Click Submit button under step 4 26 27 Viewing Results 28 1 Click on Results tab in MyAccountinglab 29 2 Click on the Assignment you were working on 30 3 Click on Project link; this will bring up your Score Summary 31 4 Within Score Summary window, click on Download (upper right) to download the spreadsheet with feedback 32 33 34 (Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instructions tab you will be 1 marked wrong.) 2 3 Initial investment 4 Cash flow, Year 1 5 Cash flow, Year 2 6 Cash flow, Year 3 7 Cash flow, Year 4 8 Cash flow, Year 5 9 Cash flow, Year 6 10 Cash flow, Year 7 11 Cash flow, Year 8 12 Cash flow, Year 9 13 IRR 14 15 16 17 18 19 20 21 22 23 24 25 26 27