Laurman, Inc. is considering the following project:

Required investment in equipment $$2,205,000$

Project life $7$

Salvage value $225,000$

The project would provide net operating income each year as follows:

Sales $$2,750,000$

Variable expenses $1,600,000$

Contribution margin $$1,150,000$

Fixed expenses:

Salaries, rent and other fixed out$-$of pocket costs $$520,000$

Depreciation $350,000$

Total fixed expenses $870,000$

Net operating income $$280,000$

Company discount rate $18\%$

Required:

$($Use cells A$4$ to C$18$ from the given information to complete this question. Negative amounts or amounts to be deducted should be input and displayed as negative values.$)$

$1.$ Compute the annual net cash inflow from the project.

$2.$ Complete the table to compute the net present value of the investment.

Year$($s$)$

Now $1$ through $77$

Initial investment $($$$2,205,000\mathrm{.}00)$

Annual cost savings

Salvage value of the new machine $$225,000\mathrm{.}00$

Total cash flows $($$$2,205,000\mathrm{.}00)$ $$225,000\mathrm{.}00$

Discount factor $1\mathrm{.}00000$

Present value of the cash flows $($$$2,205,000\mathrm{.}00)$

Net present value

Use Excel's PV function to compute the present value of the future cash flows

Deduct the cost of the investment $($$$2,205,000\mathrm{.}00)$

Net present value

$3.$ Use Excel's RATE function to compute the project's internal rate of return

$4.$ Compute the project's payback period. years

$5.$ Compute the project's simple rate of return.