A39 1 x 6 A B C D E F G H I K L Current Designs manufactures kayaks. Pedal Boats, Inc. has approached Current Designs about using its rotomold expertise and equipment to produce some pedal boat components for Pedal Boats Inc.. Current Designs is interested in exploring this opportunity, but is concerned that the pedal boats are a different shape than the kayaks it currently produces. Current Designs would need to buy 4 an additional rotomold oven in order to produce the pedal boat components. This project clearly involves risks, and management 5 wants to ensure the returns justify the risks. 6 As an intern at Current Designs, you have been asked to prepare an initial evaluation of this proposal. To aid in your analysis, the 7 following information and assumptions have been provided. Present Value tables are include in the 2nd worksheet tab for your use. B Enter labels, cell references, formulas, and typed answers where indicated. $ 24,000 $8,000 15% Useful Life of the new rotomold oven in years Depreciation Method - Projected Annual Net Income for this project 8 Straight-Line $ 23,910 10 -Cost of the new rotomold oven 11 -Salvage Value of the new rotomold oven 12 -Discount Rate 13 14 1. Compute Annual Depreciation Expense 15 Depreciable Cost 16 Estimated Life 17 Annual Depreciation Expense $16,000 2. Compute Net Annual Cash Flows Annual Net Income Add: Depreciation Expense Net Annual Cash Flows 23,910 $2,000 25,910 $2,000 18 0.926283 years 19 3. Compute the Payback period. 20 Initial Cost $24,000 1 Annual Cnch Elnur PRESENT VALUE TABLES Run 2 Enter 36010 Run 1 Type here to search G H M eo Initial Cost e1 Annual Cash Flows $24,000 25,910 0.926283 5. Based on the Internal Rate of Return, would this project be acceptable 34. What is the approximate Internal 4 Rate of Return of this project? Type Answer Type Answer 5 7. Based on your Net Present Value Analysis, would this project be Type Answer 7 6. Use the space below to create your own net present value analysis. Your 8 analysis should show all components used to compute net present value. In 9 addition, you should, whenever possible, incorporate formulas and cell 0 references in your analysis. You do not have to use all of the space provided. If you prefer, you can add an additional sheet to this file and create your analysis Cash Flow Discount Present Value Factor -24,000 0.87 0.756 0.658 0.572 0.497 0.432 PRESENT VALUE TABLES Run 2 Run 1 - le in sec 22 23 24 25 LABLE 3: Present Value of 1 Pedods 4 5% | 6% 7% 8% 9% 10% 11% 12% 15% ! 0.962 0.952 0.943 0.9350.926 0.9170.909 0.901 0.893 0.8696 0.9250907 0.89 0.873 0.857 0.842 0.8260.812 0.797 0.7561 | 0.889 0.864 0.84 0.8160.794 0.772 0.751 0.731 0.712 0.6575 | 0.8550.823 0.792 0.763 0.7350.708 0.683 0.659 0.636 0.5718 0.8220.784 0.747 0.713 0.681 0.65 0.621 0.593 0.567 0.4972) 0.79 0.746 0.705 0.666 0.63 0.596 0.564 0.535 0.5070,4323 | 0.76 0.711 0.665 0.623 0.583 0.547 0.513 0,482 0.452 0.3759 | 0.731 0.677 0.627, 0.582 0.54 0.5020,467 0,434 0.404 0.3269 0.703 0.645 0.592 0.544 0. 51 0,460,424 0.391 0.361 0.2843 | 10 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.2472) 0.65 0.585 0.527 0.475 0.429 0.388 0.35 0.317 0.287 0.2149 | 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.286 0.257 0.1869 0.601 0:53 0.469 0.415 0.368 0.326 0.29 0.258 0.229 0.1625 14 0.577 0.505 0.442 0.388 0.34 0.299 0.263 0.232 0.205 0.1413 15 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.1229 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.163 0.1069 | 0.513 0.436 0.371 0.317 0.27 0.231 0.198 0.17 0.146 0.0929 | 0.494 0.416 0.35 0.296 0.25 0.212 0.18 0.153 0.13 0.0808 | .475 .396 .331.0.276..232.0.194.0.164.0.138 1.116.0.0703 PRESENT VALUE TABLES Run 2 Run 1