Excel #4 Capital Budgeting Spring 2022 You are the CFO of a business and have the opportunity to evaluate two different investment opportunities. Information related to these investments follows: Investment 1 Investment 2 Investment Cost $ 800,000 $ 600,000 Salvage Value $ 80,000 $ 60,000 Useful Life 10 years 12 years Required Rate of Return 10% 10% Sales $ 500,000 $ 500,000 Variable Costs $ 200,000 $ 240,000 Fixed Costs (excluding depreciation) $ 100,000 $ 120,000 35% 35% Tax Rate Your company has a required rate of return of 10% for all new investments and is subject to a tax rate of 35%. 1) Determine the annual after tax cash flow for each investment. In addition, determine the after-tax cash flow for the salvage value if you assume that the actual market value of Investment #1 at the end of ten years is $100,000 and the actual market value of Investment # 2 at the end of twelve years is $40,000. 2) Prepare a schedule of expected cash flows for each investment. Note that all positive cash flows must be shown as positive numbers and all negative cash flows must be shown as negative numbers. 3) Calculate the Net Present Value for each investment using the NPV function in Excel. 4) Calculate the Internal Rate of Return for each investment using the IRR function in Excel. (Note your guess for the interest rate in the formula should be the required rate of return) 5) Recalculate the Net Present Value for INVESTMENT #1 ONLY but assume that the required/target rate of return is 6%, 12%, and 20%.