Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

how do i show these calculations in an excel sheet: : * * 1 . Initial Investment: * * - Machinery invoice price: $ 2

how do i show these calculations in an excel sheet: : **1. Initial Investment:**- Machinery invoice price: $2,800,000- Shipping charges: $20,004- Installation cost: $26,000- Feasibility report cost: $100,000 Total Initial Investment = $2,800,000+ $20,004+ $26,000+ $100,000= $2,946,004
**2. Working Capital Investment:**- Initial investment: $25,000- Beginning of year 4: $35,000**3. Incremental Sales and Costs:**- Incremental sales: 2,500 units/year for 5 years - Variable cost per unit: $200**4. Fixed Costs:**- Annual cost of two supervisors: $90,000
**5. Taxation:**- Tax rate: 30%**6. Salvage Value:**- Estimated machinery parts value: $500,000**7. Discounted Cash Flows (DCF) Analysis:** Let's recalculate the NPV, IRR, and Discounted Payback Period using the corrected information: **NPV Calculation:**
NPV =[$1,472,500/(1+0.10)^1]+[$1,472,500/(1+0.10)^2]+[$1,472,500/(1+0.10)^3]+[$1,472,500/(1+0.10)^4]+[$1,472,500/(1+0.10)^5]- $2,946,004 NPV = $1,338,636.36+ $1,216,033.06+ $1,105,484.60+ $1,005,895.09+ $915,359.17- $2,946,004 NPV = $3,582,408.28- $2,946,004 NPV = $636,404.28
**IRR Calculation:** Using the DCF formula: 0=[$1,472,500/(1+ IRR)^1]+[$1,472,500/(1+ IRR)^2]+[$1,472,500/(1+ IRR)^3]+[$1,472,500/(1+ IRR)^4]+[$1,472,500/(1+ IRR)^5]- $2,946,004 Using financial software or a calculator, the IRR is approximately 22.14%.
**Discounted Payback Period (DPP) Calculation:** Year 1: $1,472,500/(1+0.10)^1= $1,338,636.36 Year 2: $1,472,500/(1+0.10)^2= $1,216,033.06 Year 3: $1,472,500/(1+0.10)^3= $1,105,484.60 Year 4: $1,472,500/(1+0.10)^4= $1,005,895.09 Year 5: $1,472,500/(1+0.10)^5= $915,359.17 At the end of Year 5, the cumulative discounted cash flows are $5,581,408.28, which exceeds the initial investment of $2,946,004. Therefore, the Discounted Payback Period (DPP) is less than 5 years. 1. The Initial Capital Contribution:
- The price on the invoice for the machinery was $2,800,000.
- The cost of shipping is $20,000.04
- The cost of installation is $26,000
Cost of the feasibility report: one hundred thousand dollars
The total initial investment was $2,946,004, which was comprised of $2,800,000,000 plus $20,004, $26,000, and $100,000.
2. An Investment in Working Capital: - The first investment is $25,000
- Starting salary for year 4 is $35,000
3. Incremental Sales and Expenditures:
- Additional sales target of 2,500 units annually for the next five years - Variable cost per unit of $200
4. Recurring Expenses: - The annual salary of two supervisors comes to $90,000.
5. Taxation: the tax rate is thirty percent
6. Value of the Salvage - It is estimated that the mechanical pieces are worth a total of $500,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Financial Management

Authors: Eugene F. Brigham, Joel F. Houston

Concise 6th Edition

324664559, 978-0324664553

More Books

Students also viewed these Finance questions