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Example 1: Because capital budgeting requires numerous repetitive cash flows, it is an ideal application for Excel. When doing a capital budgeting problem, as in
Example 1: Because capital budgeting requires numerous repetitive cash flows, it is an ideal application for Excel. When doing a capital budgeting problem, as in most Excel uses, you should do few or no ca begin with the shark attractant project. We have the following projections for the project: Cans sold per year: Price per can: 50,000 4 Variable cost per can: Required return: 2.5 20% Fixed costs per year: 12,000 Manufacturing equipment: 90,000 Project life (years): 3 Initial net working capital: 20,000 Tax rate: 34% Sales Price $40,000 SO Book Value at Year 3 With these numbers, we can prepare the pro forma income statement. Use straight-line depreciation. Sales Variable costs Fixed costs Depreciation EBIT Taxes (34%) Net income
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