1. Label the following sheets-Documentation, Variables, Worksheet 2. Documentation: Your name, name of the problem, and date 3. Variables: All numbers given in the problem. Be sure to include the percentages given in the problem. You will need all the variables to prepare worksheet. Arrange your variables in the following format. Be sure to include required rate of return on your variable's sheet. Year Outflow Cash Revenues Cash Expenses Outflow and Net Cash Flows Outflow (XXX,XXX) 1 2 3 4 5 (XXX,XXX) 4. Worksheet: Follow this format. Be sure to link variables to worksheet. Formulas should be included in the links. A link begins in the destination cell with "=" and then you pick up the variable from the variables page. If necessary build a formula and add more variables. When complete hit enter. Link variables to worksheet for the different options. Formulas can be included in the links. a. Formula for NPV is =NPV(rate, inflows) + Outflow b. Formula for IRR is =IRR(highlight outflows with inflows, guess any percentage) Payback ARR NPV IRR 5. Check figures. ARR, 19.1%. NPV, $184,619. Directions for Your Excel Memo 1. Direct your memo to President Blaylock, President of the Blaylock Company. 2. Your first sentence summarizes the subject matter of the memo. 3. Insert your worksheet. 4. Explain NPV, IRR, ARR and Payback 5. Explain the limitations of ARR and Payback. Exercise 12-36 Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return Objective 1, 2, 3, 4 Blaylock Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of tractors. The outlay required is $384,000. The NC equipment will last 5 years with no expected salvage value. The expected after-tax cash flows associated with the project follow: < Year 1 2345 Cash Revenues Cash Expenses $510,000 $360,000 510,000 360,000 510,000 360,000 510,000 360,000 510,000 360,000 Required: 1. Compute the payback period for the NC equipment. 2. Compute the NC equipment's ARR. Round the percentage to one decimal place. 3. Compute the investment's NPV, assuming a required rate of return of 10%. 4. Compute the investment's IRR