1. Determine the payback period for an Investment 2. Evaluate the acceptability of an Investment project using the net present value method. 3. Evaluate the acceptability of an Investment project using the Internal rate of return method. 4. Compute the simple rate of return for an Investment. ? Comparison of Capital Budgeting Methods - Excel PAGE LAYOUT FORMULAS DATA REVIEW VIEW FILE HOME INSERT Sign In i Calibri 11 Paste BIU Cells - A Alignment Number Conditional Format as Cell Formatting Table Styles Styles Laurman, Inc. is considering the following project: Clipboard Font A1 : D E 1 S S 2,750,000 1,600,000 1,150,000 S 12 B Laurman, Inc. is considering the following project: 2 Required investment in equipment 2,205,000 3 Project life 7 4 Salvage value 225,000 5 6 The project would provide net operating income each year as follows: 7 Sales 8 Variable expenses 9 Contribution margin 10 Fixed expenses: 11 Salaries, rent and other fixed out-of pocket costs $ 520,000 Depreciation 350.000 13 Total fixed expenses 14 Net operating income 15 16 Company discount rate 18% 17 18 1. Compute the annual net cash inflow from the project. 19 20 2. Complete the table to compute the net present value of the investment. 21 22 Year(s) Now 1-7 Sheet1 870,000 280,000 23 7 4 O + 100% READY Attempt(s) Hint 1. Determine the payback period for an Investment 2. Evaluate the acceptability of an Investment project using the net present value method. 3. Evaluate the acceptability of an Investment project using the Internal rate of return method. 4. Compute the simple rate of return for an Investment. - 5 X Comparison of Capital Budgeting Methods - Excel PAGE LAYOUT FORMULAS DATA REVIEW FILE HOME INSERT VIEW Sign In Calibri 11 A % Paste BIU 50 Alignment Number Cells Conditional Format as Cell Formatting" Table Styles Styles Clipboard Font > A1 fox Laurman, Inc. is considering the following project: V A B E 22 7 Year(s) 23 Now 1-7 24 nitial investment 25 Annual cost savings 26 Salvage value of the new machine 27 Total cash flows 28 Discount factor 1.000 29 Present value of the cash flows 30 Net present value 31 32 Use Excel's PV function to compute the present value of the future cash flows 33 Deduct the cost of the investment 34 Net present value 35 36 3. Use Excel's RATE function to compute the project's internal rate of return 37 38 4. Compute the project's payback period. 39 40 5. Compute the project's simple rate of return. 41 42 43 44 years Sheet1 100% READY Attempt(s) Hint