Question
Please show excel formulas needed for calculation in excel spreadsheet in answer- TY You have been hired as a financial consultant by PJ corporation. PJ
Please show excel formulas needed for calculation in excel spreadsheet in answer- TY
You have been hired as a financial consultant by PJ corporation. PJ is considering investing in a new machine to produce dog biscuits. PJ has provided you with the following information:
Full price of machine is $125,000.
The machine will not require any modification or increase in net working capital.
PJ has a 30% marginal tax rate.
The machine falls into the MACRS 3-year class.
PJ will use the machine for 5 years and then plans to sell it for $5,000 at the end of year 6.
The machine is expected to increase earnings before depreciation by $35,000 a year for the life of the machine.
PJ has a WACC of 11%.
You have been hired by PJ to create a spreadsheet (40 points) that can be used by the PJ managers to assist them in making the investment decision and will calculate the NPV of the project. The spreadsheet should be set up to allow for sensitivity analysis to be conducted. The cells to input the full price, tax rate, increased earnings, sale price in year 6, and WACC should be easily identified and allow the PJ managers to change their values. Additionally, on a separate sheet in the same MS-Excel file, write out your decision recommendation and justification (approximately 25 words total, 10 points).
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started