is my cost of capital correct?

are any of these better?

my question is is my cost of capital correct. from the given numbers on the picture can you tell if its correct or not?

do I take the cost of the new rotomold oven minus the salvage value to get the cost of capital or do I just take the cost of the new rotomold oven??

Current Designs manufactures kayaks. Pedal Boats, Inc. has approached Current Designs about using its rotomold expertise components for Pedal Boats Inc.. Current Designs is interested in exploring this opportunity, but is concerned that the pedal it currently produces. Current Designs would need to buy an additional rotomold oven in order to produce the pedal boat co 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, have been provided. Present Value tables are include in the 2nd worksheet tab for your use. Enter labels, cell references, indicated. -Cost of the new rotomold oven -Salvage Value of the new rotomold oven -Discount Rate $256,000 $8,000 -Useful Life of the new rotomold ou -Depreciation Method - Projected Annual Net Income fort 12 15% 14 1. Compute Annual Depreciation Expense. Depreciable Cost Estimated Life Annual Depreciation Expense $248,000 2. Compute Net Annual Cash Flow projected net income depreciation Net Annual Cash Flows 16 31000 3. Compute the Payback Period. Cost of Capital Net annual cash flows $256.000 46,200 $ 5.54 years 5. Based on the Internal Rate of Return, would 4. What is the approximate Internal Rate of Return of this project? 9% No internal rate of return is below cost of capit 6. Use the space below to create your own net present value analysis. Your analysis should show all components used to compute net present value. In addition, you should, whenever possible, incorporate formulas and cell references in your analysis. You do not have to use all of the space provided. If you prefer, you can add an additional sheet to this file and create your analysis there. 7. Bos would No. Ne thance Cash Flow Present Value .46,200, Discount Faster # ## ### # ## 8. Chc 9. Cop 46.200 with th USING PRESENT VALUE TABLES @ .15%. .wear.1.cash flow.. xear.2.cash flow.. weer.3.cash flow.. xear.4 cash flow.. year.5.cash flow.. xear.. cash flow. year 7 cash flow vear & cash flow # $40.174.13 $34.933.67 $30,377.42 $26.414.85 $22.969.72 $19.273.65 46,200. 46.2001 46,200. 46.200. nuninninn Cost of Project # # # # # # $17,368.43 10. Sa # 46.2003 $15.102.78) 43 USING ANNUITY TABLES @15% $207,314.65 $207,299.40 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 Portal Beats inc. Current Designs is interested in exploring this opportunity, but is concerned that the pedal boss wederent shape than the kayaksit currently produces Current Designs would need to buy an additional rotmold ven in order to produce the pedalboat comportem. This project charly involves risks, and management wants to ensure the returns justify the risks As an intamat Current Design, you have been asked to prepare an initial evaluation of this proposal Towd in your analysis, the following information and aumptions have been provided. Present Value tables are include in the 2nd worksheet tab for your us. Enter labels, cell references, formulas, and typed answers where indicated Cost of the new romoldoven Salse Value of the new roomaldoven Discount $256,000 $8,000 -Useful Lite of the new rotmoldoen in years -Depreciation Method Projected Annual Net Income for this project Straight line ye. Net present blues of Tulure ca apu a 1 Current Designs manufactures Kayaks. Pedal Boats, Inc, has approached Current Designs about using its rotomold expertise and equipment to produce 2 Some pedalboat components for Pedalboats inc. Current Consis interested in exploring this opportunity, but is concerned that the pedal boats are a 3 different shape than the kayaksit currently produces Current would need to buy an additional roti moldoven in order to produce the pedal boat 4 components. This project clearly involves risks, and management wants to ensure the returns justify the risks. 6 As an internat Current Designs, you have been asked to prepare an initialevaluation of this proposal to aid in your analysis, the following information 7 and assumptions have been provided. Present Valve tables are include in the work heet tab for yourse Enter labels, cell references, formulas, and typed answers where indicated. 10 Cost of the new rotomoldoven $340,000 - Useful life of the new rotomoldovenin years 11 Salvage Value of the new rotomoldoven $8.000 Depreciation Method 12 Discount itate 15% Projected Annual Net Income for this project 14 I Computer Annual Depreciation Expense. Compute Not Anal Cacho 15 Depreciatie Cost precedence 16 Estimated life depreciation 17 An D ection Expense Net Annual Cash Flows 10 3. Compute the Payback Period 20 Cost of Capital Zt tannual cash flows 23 4. What is the approximate internal Rate of 24 Return of this project? 5. More on Me Antral Mote of Return, would this project benephobia? Explain YES, INTERNAL RATT OV RETURN APPROXIMATES COST OF CAPITAL ... Should Aosefon m ot ferot oni .. .... do CU Calibri [Copy - Paste BLUE CAE EE E Merge & Cen Format Painter Clipboard WGLFont . Alignment J29 X f x yes. Net present values of future cash appoximates cost of - A B C D E F G H I 1 Current Designs manufactures kayaks. Pedal Boats, Inc. has approached Current Designs about usi 2 some pedal boat components for Pedal Boats Inc.. Current Designs is interested in exploring this o 3 different shape than the kayaks it currently produces. Current Designs would need to buy an additi 4 components. This project clearly involves risks, and management wants to ensure the returns justit 6 As an intern at Current Designs, you have been asked to prepare an initial evaluation of this proposa 7 and assumptions have been provided. Present Value tables are include in the 2nd worksheet tab for 8 and typed answers where indicated. 9 $240,000 $8,000 15% -Useful Life of the -Depreciation Meth - Projected Annual N $232,000 10 -Cost of the new rotomold oven 11 -Salvage Value of the new rotomold oven 12 - Discount Rate 13 14 1. Compute Annual Depreciation Expense. 15 Depreciable Cost 16 Estimated Life 17 Annual Depreciation Expense 18 19 3. Compute the Payback Period. 20 Cost of Capital 21 Net annual cash flows 2. Compute Net Ann projected net income depreciation Net Annual Cash Flow 29000 $240,000 52,910 $ 4.54 years 23 4. What is the approximate Internal Rate of 24 Return of this project? 15% 5. Based on the Internal Rate of Re 25 YES, INTERNAL RATE OF RETURN AF 27 6. Use the space below to create your own net present value analysis. Your analysis should 28 show all components used to compute net present value. In addition, you should, whenever 29 possible, incorporate formulas and cell references in your analysis. You do not have to use all 30 of the space provided. If you prefer, you can add an additional sheet to this file and create 31 your analysis there. USING PRESENT VALUE TABLES Cash Flow Discount Present Value Factor 33 year 1 cash flow 52,910 0.8696 $46,008.95 34 year 2 cash flow 52,910 0.7561 $40,007.37 35 year 3 cash flow 52,910 0.6575 $34,789.38 36 year 4 cash flow 52,910 0.5718 $30,251.29 37 year 5 cash flow 52,910 0.4972 $26,305.79 38 year 6 cash flow 52,910 0.4323 $22,874.58 Run 1 Run 2 PRESENT VALUE TABLES Type here to search La Copy Paste Format Painter Clipboard TU - OAEEEEEE Font Alignment for yes. Net present values of future casH appoxim C D 1 Current Designs manufactures kayaks. Pedal Boats, Inc. has approached Current Design 2 some pedal boat components for Pedal Boats Inc.. Current Designs is interested in exp 3 different shape than the kayaks it currently produces. Current Designs would need to be 4 components. This project clearly involves risks, and management wants to ensure the > 6 As an intern at Current Designs, you have been asked to prepare an initial evaluation of 7 and assumptions have been provided. Present Value tables are include in the 2nd work: 8 and typed answers where indicated. 10 -Cost of the new rotomold oven 11 -Salvage Value of the new rotomold oven 12 -Discount Rate $240,000 $8,000 15% -Usefu -Depre -Projec 13 $232,000 2. Com projecte deprecic Net Ann 29000 14 1. Compute Annual Depreciation Expense. 15 Depreciable Cost 16 Estimated Life 17 Annual Depreciation Expense 18 19 3. Compute the Payback Period. 20 Cost of Capital 21 Net annual cash flows 22 23 4. What is the approximate Internal Rate of 24 Return of this project? $240,000 52,910 $ 4.54 years 5. Based on the inten 15% YES, INTERNAL RATE 26 27 6. Use the space below to create your own net present value analysis. Your analysis should 28 show all components used to compute net present value. In addition, you should, whenever 29 possible, incorporate formulas and cell references in your analysis. You do not have to use al 30 of the space provided. If you prefer, you can add an additional sheet to this file and create 31 your analysis there. USING PRESENT VALUE TABLES Cash Flow Discount Present Valu Factor 33 year 1 cash flow 52,910 0.8696 $46,008.9 34 year 2 cash flow 52,910 0.7561 $40,007.3 35 year 3 cash flow 52,910 0.6575 $34,789.34 36 year 4 cash flow 52,910 0.5718 $30, 251.28 37 year 5 cash flow 52,910 0.4972 $26,305.79 38 year 6 cash flow 52,910 0.4323 $22,874.58 Run 1 Run 2 PRESENT VALUE TABLES +