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A B D E F 1 2 Problem 4-27 3 You are thinking of building a new machine that will save you $1,000 in the

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A B D E F 1 2 Problem 4-27 3 You are thinking of building a new machine that will save you $1,000 in the first year. The machine will then begin to wear out so that the savings decline at a rate of 2% per year forever. What is the present value of the savings if the interest rate is 5% per year? Complete the steps below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you need. To copy/paste a formula across a row or down a column, an absolute cell reference or a mixed cell reference may be preferred. If a specific Excel function is to be used, the directions will specify the use of that function. Do not type in numerical data into a cell or function. Instead, make a reference to the cell in which the data is found. Make your computations only in the blue cells highlighted below. In all cases, unless otherwise directed, use the earliest appearance of the data in your formulas, usually the Given Data section. 5 6 $ 7 1st year's saving Growth rate Interest rate 1,000 -2% 5% 8 9 10 Present value 11 12 13 Requirements 1 In cell D10, by using cell references, calculate the value of the savings produced by the new machine 14 (1 pt.). 15

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