ALL ANSWERS NEED TO BE ENTERED AS A FORMULA

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. Comparison of Capital Budgeting Methods - Excel ? 0 - 5 X FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Sign In Calibri 11 A A % Paste BIU- A Alignment Number Conditional Format as Cell Cells Editing Formatting Table - Styles - Clipboard G Font Styles A1 X V Laurman, Inc. is considering the following project: A B C D E 4 1 Laurman, Inc. is considering the following project: 2 Required investment in equipment $ 2,205,000 3 Project life 7 4 Salvage value 225,000 6 The project would provide net operating income each year as follows: Sales 2,750,000 Variable expenses 1,600,000 LD 00 Contribution margin 1,150,000 10 Fixed expenses: 11 Salaries, rent and other fixed out-of pocket costs 520,00012 Depreciation 350,000 13 Total fixed expenses 870,000 14 Net operating income S 280,000 15 16 Company discount rate 18% 17 18 1. Compute the annual net cash inflow from the project. 19 20 2. Complete the table to compute the net present value of the investment. 21 22 Year(s) 23 Now 1-7 7 24 Initial investment 25 Annual cost savings 26 Salvage value of the new machine 27 Total cash flows 28 Discount factor 1.000 29 Present value of the cash flows Sheet1 + 1 READY + 100%