Please do the Q4, Q5, Q6, on the excel spreadsheet

PUT ANSWERS IN THIS COLUMN =PV() #VALUE! =PV =PV =PV #VALUE! 4. The cafeteria you operate has a regular clientele for all three meals, seven days a week. You want to expand your product line beyond what you are currently able to offer. To do so requires the purchase of some additional specialty equipment costing $45,000, but you project a resultant increase in sales (after deducting the cost of sales) of about $8,000 per year for each of the next 8 years with this new equipment. Assuming a required rate of return (i.e. hurdle rate) of 8% should you pursue this opportunity? Why or why not? Do the analysis under two conditions A. You are part of an income exempt enterprise. Hint: You have to find the NPV. Therefore, use Exhibit 4 to find the table factor (8 years at 8%) and multiply that by the projected increase in sales. Subtract the original equipment cost ($45,000) from the PV to get the NPV. If the NPV is POSITIVE, it's a good investment. B. The enterprise you are a part of is subject to a 40% corporate income tax rate, and the straight line, depreciable life of the equipment you are contemplating purchasing is five years. after tax amount PV monthly depreciation tax PV total tax PV Paid- $45,000+total tax Equipment Costs Increase in sales Discount Factor (8%) - PV for a series of amounts PV each month Now Year 1 $ (45,000) Year 2 Year 3 Year 4 1.0000 $ - $ - $ - $ - Net PV = paid-year 8 PV $ (45,000.00) Analysis: Equipment Costs Now Year 1 $ (45,000) Year 2 Year 3 Year 4 Coporate income tax based on revenue = (increase revenue)*(1corporate income tax rate) Discount Factor (8%) - PV for a series of amounts PV each month 1.0000 $ Tax Depreciation (45,000/5 years = 9000/year)*40% Discount Factor (8%) - PV for a series of amounts PV of tax depreciation TOTAL NPV Analysis: 1.0000 $ (45,000.00) - $ - $ - $ - Year 5 $ Year 6 - Year 5 $ - Year 6 $ $ 3,600.00 $ Year 7 - $ Year 8 - Year 7 - $ $ - Year 8 - $ - PUT ANSWERS IN THIS COLUMN pv xx xx 5. You are contemplating the purchase of a one-half interest in a corporate airplane to facilitate the expansion of your business into two new geographic areas. The acquisition would eliminate about $220,000 in estimated annual expenditures for commercial flights, mileage reimbursements, rental cars, and hotels for each of the next 10 years. The total purchase price for the half-share is $6 million, plus associated annual operating costs of $100,000. Assume the plane can be fully depreciated on a straight-line basis for tax purposes over 10 years. The company's weighted average cost of capital (commonly referred to as WACC) is 8%, and its corporate tax rate is 40%. Does this endeavor present a positive or negative net present value (NPV)? If positive, how much value is being created for the company through the purchase of this asset? If negative, what additional annual cash flows would be needed for the NPV to equal zero? To what phenomena might those additional positive cash flows be ascribable? PV NPV = (-?)+PV Need to break even What is needed to break even (to pushing the NPV to Zero)? (total NPV/Year 10 discount factor) #DIV/0! Calculations: Annual Tax savings due to depreciation = (purchase priceumber of years)*tax rate After-tax annual expense savings = (estimated annual expenditures*(1-tax rate) After-tax annual operating costs = annual operating costs*(1-tax rate) TOTAL ANNUAL CASH FLOW = annual tax savings + after tax annual expense savings - after tax annual operting costs $ Now Year 1 Total Annual Cash Flow Discount Factor (8%) - PV for a series of amounts PV Initial Investment Paid TOTAL NPV Analysis 1.0000 $ - Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 $ - PUT ANSWERS IN THIS COLUMN This is a IRR question. 6. The final tally is in: This year's operating costs were cut down $100,000, a decrease directly attributable to the $520,000 investment in the automated materials handling system put in place at the beginning of the year. If this level of annual savings continues for five more years, resulting in six total years of annual savings, what compounded annual rate of return will that represent? If these annual savings continue for nine more years (a total of 10 years), what compounded annual rate of return will that represent? ( You may ignore income taxes.) money Now Year 1 $ 520,000 Discount Factor - PV for a Series of Invested Amounts PV annuity 1.0000 $ 520,000.00 $ The Discount Factor has been found above. Look for this number in the PB annunity table under 6 year row. Therefore, the IRR is Discount Factor is still 5.2, but look for interest in the 10 year row. Therefore, the IRR is Year 2 - $ Year 3 - $ - Year 4 $ Year 5 - $ Year 6 - $