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 an additional rotomold oven in order to produce the pedal boat components. This project clearly involves risks, and management wants to ensure the returns justify the risks. As an intern at Current Designs, you have been asked to prepare an initial evaluation of this proposal. To aid in your analysis, the following information and assumptions have been provided. Present Value tables are include in the 2nd worksheet tab for your use. Enter labels, cell references, formulas, and typed answers where indicated. -Cost of the new rotomold oven $256,000 $8,000 -Useful Life of the new rotomold oven in years 8 -Salvage Value of the new rotomold oven -Depreciation Method Straight-Line -Discount Rate 15% -Projected Annual Net Income for this project 15,200 1 Compute Annal Depreciation Expense. Depreciable Cost Estimated Life 2 Compute Net Annual Cash Flows LABEL Cell Reference Cell Reference Formula Cell reference LABEL Annual Depreciation Expense Net Anrual Cash Flows Formula Formula 3 Compute the Payback Period Cell Reference Cell Reference LABEL Formula years LABEL Based on the Internol Rote of Reiurn, would this project be acceptoble? Exploin. 4What is the approximate iternal Rote of Return of this profect? 5 Answer Type Answer Use the space below to creote your ow net present walue onalysis. Your onahsis should Based on your Net Present Value Analysis, 6 7. wwould this profect be acceptoble? Explain. show af compnts used to te net present value. in addion, you shoud, whenever osstble, incorte formuos ond cel references in you asis. You do ot hove to use o of the space provided. fyou prefer, you con add on additionol sheet to this file ond Type Answer reate youw agis there. Cash Flow Discount Present Value Factor Cell reference Cell reference Formula Value & Chonge the tab nome to Run 1 Value Formula Copy the tob ond nome R Rn 2ond update 9. ith the folowing information: Formula Cell Reference $ 240,000 Cost of the new rolomold oven Formula Projected Arrual Net Income 23,910
