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 3 R FILE POME INSERE Comparison of Capital Rudyeting Methods Excel PAGE LAYOUT FORMULAS DATA REVIEW 2 7 VIEW Cali 111 Signe ce Past B TU- AA A 96 Alignment Number Card Conditional Formatas Cert Formatting - Table Styles Celt ent Editing 040 f 2,205,000 225,000 S B 1 Laurman, Inc. is considering the following project: 2 > Required investment in equipment 2 $ 3 Project life - 4 Salvage value 5 5 The project would provide net operating income each year as follows: 2 Sales Variable expenses Contributor margin Te Fedpenses 23 Balans, tent and other fixed out of pocket costs 12 Depreciation Total food expenses 14 Net operating income 15 26 Company discount rate 1896 27 Compute the annual net cash inflow from the project. 2,250.000 2.GOD.O.O 150.000 520,000 350.000 13 870,000 C D Z 19 20 2. Complete the table to compute the net present value of the investment. 21 22 Year(s) 23 Now 1-7 24 Initial 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 36 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 35 40 5. Compute the project's simple rate of return. 41 42 43 yea yed 44