Accessibility tab summary: Financial information for Laurman, Incorporated, is presented in rows 4 to 18. A statement of requirement is presented in row 22. Table 1 for student presentation is presented in row 24. A statement for requirement 1 is presented in rows 26. A table for student presentation is presented in cells A28 to D36 and rows 38 to 40 and 42, 44 and 46.
Laurman, Inc. is considering the following project:
Required investment in equipment	$2,205,000
Project life	7
Salvage value	225,000
The project would provide net operating income each year as follows:
Sales		$2,750,000
Variable expenses		1,600,000
Contribution margin		$1,150,000
Fixed expenses:
Salaries, rent and other fixed out-of pocket costs	$520,000
Depreciation	350,000
Total fixed expenses		870,000
Net operating income		$280,000

Company discount rate

18%

Required:(Show the excel formula)

(Use cells A4 to C18 from the given information to complete this question. Negative amounts or amounts to be deducted should be input and displayed as negative values.)

1. Compute the annual net cash inflow from the project.
2. Complete the table to compute the net present value of the investment.
		Year(s)
	Now	1 through 7	7
Initial investment
Annual cost savings
Salvage value of the new machine
Total cash flows
Discount factor	1.00000
Present value of the cash flows
Net present value
Use Excel's PV function to compute the present value of the future cash flows
Deduct the cost of the investment
Net present value
3. Use Excel's RATE function to compute the project's internal rate of return
4. Compute the project's payback period.		years
5. Compute the project's simple rate of return.