**********Please answer the questions with the detailed excel formula**************

= B D E F G H 3 a. Develop a spreadsheet model, and use it to find the project's NPV, IRR, and payback. 4 5 Input Data (in thousands of dollars) 6 Scenario name Base Case Note: the items in red will be used in a scenario analysis. 7 Probability of scenario 50% 8 Equipment cost $25,000 9 Net operating working capital/Sales 12% Key Results: 10 First year sales (in units) 2,000 NPV = 11 Sales price per unit $21.00 IRR 12 Variable cost per unit (excl. depr.) $15.00 Payback = 13 Nonvariable costs (excl. depr.) $1,500 14 Inflation in prices and costs 2.5% 15 Estimated salvage value at year 4 $1,000 16 Depreciation years Year 1 Year 2 Year 3 Year 4 17 Depreciation rates 20.00% 32.00% 19.20% 11.52% 18 Tax rate 20% 19 WACC for average-risk projects 10% 20 21 Intermediate Calculations 0 1 2 3 4 22 Units sold 23 Sales price per unit (excl. depr.) 24 Variable costs per unit (excl. depr.) 25 Nonvariable costs (excl. depr.) 26 Sales revenue 27 Required level of net operating working capital 28 Basis for depreciation 29 Annual equipment depr. rate 20.00% 32.00% 19.20% 11.52% 30 Annual depreciation expense 31 Ending Bk Val: Cost - Accum Dep'rn 32 Salvage value 33 Profit (or loss) on salvage 34 Tax on profit (or loss) 35 Net cash flow due to salvage 3 E F H G Years 2 0 1 3 4 A B D 36 37 Cash Flow Forecast 38 Sales revenue 39 Variable costs 40 Nonvariable operating costs 41 Depreciation (equipment) 42 Oper. income before taxes (EBIT) 43 Taxes on operating income (20%) 44 Net operating profit after taxes 45 Add back depreciation 46 Equipment purchases 47 Cash flow due to change in NOWC 48 Net cash flow due to salvage 49 Net Cash Flow (Time line of cash flows) 50 51 Key Results: Appraisal of the Proposed Project 52 53 Net Present Value (at 10%) = 54 IRR = 55 MIRR = 56 Payback = 57 Discounted Payback = 58 Data for Payback Years 59 60 Net cash flow 61 Cumulative CF 62 Part of year required for payback 63 64 65 Data for Discounted Payback Years 66 67 Net cash flow 68 Discounted cash flow 69 Cumulative CF 70 Part of year required for discounted payback 71 Years 2 0 1 3 4 Years 2 4 0 $0 1 $0 3 $0 $0 $0 = B D E F G H 3 a. Develop a spreadsheet model, and use it to find the project's NPV, IRR, and payback. 4 5 Input Data (in thousands of dollars) 6 Scenario name Base Case Note: the items in red will be used in a scenario analysis. 7 Probability of scenario 50% 8 Equipment cost $25,000 9 Net operating working capital/Sales 12% Key Results: 10 First year sales (in units) 2,000 NPV = 11 Sales price per unit $21.00 IRR 12 Variable cost per unit (excl. depr.) $15.00 Payback = 13 Nonvariable costs (excl. depr.) $1,500 14 Inflation in prices and costs 2.5% 15 Estimated salvage value at year 4 $1,000 16 Depreciation years Year 1 Year 2 Year 3 Year 4 17 Depreciation rates 20.00% 32.00% 19.20% 11.52% 18 Tax rate 20% 19 WACC for average-risk projects 10% 20 21 Intermediate Calculations 0 1 2 3 4 22 Units sold 23 Sales price per unit (excl. depr.) 24 Variable costs per unit (excl. depr.) 25 Nonvariable costs (excl. depr.) 26 Sales revenue 27 Required level of net operating working capital 28 Basis for depreciation 29 Annual equipment depr. rate 20.00% 32.00% 19.20% 11.52% 30 Annual depreciation expense 31 Ending Bk Val: Cost - Accum Dep'rn 32 Salvage value 33 Profit (or loss) on salvage 34 Tax on profit (or loss) 35 Net cash flow due to salvage 3 E F H G Years 2 0 1 3 4 A B D 36 37 Cash Flow Forecast 38 Sales revenue 39 Variable costs 40 Nonvariable operating costs 41 Depreciation (equipment) 42 Oper. income before taxes (EBIT) 43 Taxes on operating income (20%) 44 Net operating profit after taxes 45 Add back depreciation 46 Equipment purchases 47 Cash flow due to change in NOWC 48 Net cash flow due to salvage 49 Net Cash Flow (Time line of cash flows) 50 51 Key Results: Appraisal of the Proposed Project 52 53 Net Present Value (at 10%) = 54 IRR = 55 MIRR = 56 Payback = 57 Discounted Payback = 58 Data for Payback Years 59 60 Net cash flow 61 Cumulative CF 62 Part of year required for payback 63 64 65 Data for Discounted Payback Years 66 67 Net cash flow 68 Discounted cash flow 69 Cumulative CF 70 Part of year required for discounted payback 71 Years 2 0 1 3 4 Years 2 4 0 $0 1 $0 3 $0 $0 $0