Acct301

perating Budget Cash Budget Variances Decisions Capital are a discounted cash flow analysis Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 To ment -300,000 Flows 135,000 135,000 135,000 135,000 135,000 200,000 200,000 200,000 200,000 200,000 ge value -50,000 ting Costs -95,000 -95,000 -95,000 -95,000 -95,000 -135,000 -135,000 -135,000 -135,000 -135,000 -1, Maintenance (E) ash Flow -300,000 40,000 40.000 40,000 40,000 40,000 65,000 65,000 65,000 65,000 15,000 nulative CF -300,000 -260,000 -220,000 -180,000 -140,000 -100,000 -35,000 30,000 95,000 160,000 175,000 Hurdle Rate 5% resent Value (=NPV) A) Use the Excel function =NPV in order to determine the value of the future cash flows, net of the initial investment al Rate of Return (=IRR) (B) Use the IRR function in order to determine the "interest" earned on the cash flows from year 0 to year 10 ck Period C) Look at the cummulative cash flow. How long before the initial investment is paid off? ability Index D) Calculate the ratio of the project's PV of cashflows from years 1-10/ initial investment Major Maintenance -85,000 (E) Decide in which year (5-7) this expenditure should be made. Add $5,000 for every year after year 5