For the present value of an annuity formula C28, present value of 1 cell D 28 and PV finction in D23

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. ? x - 5 Sign In Comparison of Capital Budgeting Methods - Excel PAGE LAYOUT FORMULAS DATA REVIEW FILE HOME INSERT VIEW Paste B I U - - AAlignment Number Conditional Format as Cell Formatting Table Styles Styles Cells - Editing Globound Font Laurman, Inc. is considering the following project: 1 Laurman, Inc. is considering the followihg project: 2 Required investment in equipment 3 Project life 4 Salvage value 2,205,000 225,000 6 The project would provide net operating income each year as follows: 7 Sales 2,750,000 1,600,000 1,150,000 Variable expenses Contribution margin Fixed expenses: Salaries, rent and other fixed out of pocket costs Depreciation Total fixed expenses Net operating income 520,000 350,000 13 870,000 280.000 16 Company discount rate 18% 18 1. Compute the annual net cash inflow from the project. 20 2. Complete the table to compute the net present value of the investment * f Laurman, Inc. is considering the following project: 20 2. Complete the table to compute the net present value of the investment. Year's) 1-7 Now 24 Initial investment 25 Annual cost savings 26 Salvage value of the new machine 27 Total cash flows 28 Discount factor 29 Present value of the cash flows 30 Net present value 1.000 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 36 3. Use Excel's RATE function to compute the project's internal rate of return 37 38 4. Compute the project's payback period. years 39 40 S. Compute the project's simple rate of return. 41 Sheet1 ... READY C28 =(1/B16)*(1-(1/(1+B16)^(3)) D28 =1/(1+B16)^C3 D32 --PV(B16,CB,D18,C4)