All answers must be typed as equations in blank highlighted spaces on excel sheet. This is my third time posting this please post as equations.
Need answers for:
3. Use Excel Rates function to compute the projects internal rate of return.
4. Compute the projects payback period
5. Compute the projects simple rate of return
Excel SIM: Comparison of Capital Budgeting Methods 1. Determine the payback period for an investment. 2. Evaluate the acceptability of an investment project using the net present value method. 3. Evaluate the acceptability of an investment project using the internal rate of return method. 4. Compute the simple rate of return for an investment. 5 Comparison of Capital Budgeting Methods - Excel PAGE LAYOUT FORMULAS DATA REVIEW VIEW FILE HOME INSERT Sign In Calibri 11 Paste B IU- .. % Alignment Number Conditional Format as Cell Formatting* Table Styles Styles Cells Editing Clipboard Font A A1 for Laurman, Inc. is considering the following project: D E 2,205,000 7 225,000 $ B 1 Laurman, Inc. is considering the following project: 2 Required investment in equipment $ 3 Project life 4 Salvage value 5 6 The project would provide net operating income each year as follows: 7 Sales 8 Variable expenses 9 Contribution margin Fixed expenses: Salaries, rent and other fixed out-of pocket costs $ Depreciation 13 Total fixed expenses Net operating income 15 16 Company discount rate 18% 2,750,000 1,600,000 1,150,000 $ 10 11 520,000 350,000 12 870,000 280,000 14 $ 17 18 1. Compute the annual net cash inflow from the project. $ 630,000 19 20 2. Complete the table to compute the net present value of the investment. 21 7 22 Year(s) 23 Now 1-7 24 Initial investment $ (2,205,000.00) 25 Annual cost savings $ 630,000.00 26 Salvage value of the new machine $ 27 Total cash flows $ (2,205,000.00) $ 630,000.00 $ 28 Discount factor 1.000 3.182 29 Present value of the cash flows $ (2,205,000.00) $ 2,401,262.38 $ 30 Net present value $ 266,895.52 31 32 Use Excel's PV function to compute the present value of the future cash flows $ 33 Deduct the cost of the investment $ 34 Net present value $ 35 36 3. Use Excel's RATE function to compute the project's internal rate of return 225,000.00 225,000.00 0.314 70,633.13 ulull 2,471,895.52 (2,205,000.00) 266,895.52 37 38 4. Compute the project's payback period. years 39 40 5. Compute the project's simple rate of return. 41 42 43 14 Sheet1 + READY + 100% Attempt(s) Hint Show Me
