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AutoSave ON Ch 11 Ex - Saving.. Q V Home Insert Draw Page Layout Formulas Data Review View Share Comments VA A ab v Conditional Formatting Insert v EVAC Paste Format as Table Ex Delete v BI U V V V A v - = $ ~ % 9 Cell Styles v Format v X v Sort & Find & Ideas Sensitivity Filter Select B5 4 X V fx| B C D E F G H K L M N O P Q 1 Ch 11 A N Solution Code Alt. Exercise A 4 a. Determine the annual estimated NET INCOME and NET CASH FLOW. Hint? Accrual Net Income Cash Flow 7 Cash Inflows 8 Cash Outflows 9 Depreciation Hint? 10 Income before taxes 11 Income Tax (30%) Hint? 12 Annual net income 13 Annual net cash flow 14 Self check: 15 16 b. Calculate the payback period (show work) Hint ? 17 18 Payback period = 19 Self check: 20 21 c. Calculate the accounting (or unadjusted) rate of return (show work) 22 Hint? 23 First, you need the annual average investment: 24 25 26 27 Next, Calculate Accounting Rate of Return: Hint ? 28 29 Acctg Rate of return = 30 Self check: 31 32 3 Problem E 34 Hint? 35 a. Calculate the payback period for each investment (show work) 36 27 Sheet1 Sheet2 Sheet3 + Edit + 100%AutoSave ON wa Ch 11 - Saved Home Insert Draw Design Layout References Mailings Review View Share Comments Trebuchet... 18 AA Aav Ap 24 AaBbCcDdEe AaBbCcDdEe AaBbCcD AaBbCcDdE AaBb Paste BI Uvab X X A LA Normal No Spacing Heading 1 Heading 2 Title Styles Sensitivity Pane Ch 11 - Capital Budgeting | Exercise A- DO ONLY IN EXCEL AND SCREENSHOT IT PLEASE YOU CAN WRITE IT TOO IF YOU WANT. SHOW ALL OF YOUR CALCULATIONS. Diane Manufacturing Company is considering investing $500,000 in new equipment with an estimated useful life of 10 years and no salvage value. The equipment is expected to produce $320,000 in cash inflows and $200,000 in cash outflows annually. The company uses straight-line depreciation, and has a 30% tax rate. a. Determine the annual estimated net income and net cash inflow. b. Calculate the payback period c. Calculate the accounting rate of return. Problem E Merryll, Inc., is considering three different investments involving depreciable assets with no salvage value. The following data relate to these investments: Investment Initial Cost After-tax net cash inflow Useful Life (years) $ 140,000 $28,000 10 240,000 48,000 20 360,000 68,000 10 The income tax rate is 40%. Management requires a minimum return on investment of 12%. Rank these proposals using the following selection techniques: a. Payback period. b. Unadjusted rate of return. (remember to calculate and SUBTRACT depreciation from net cash inflow for net income c. Discuss the results. Which project would you recommend and why? Discuss both payback period and rate of return in your analysis. Page 1 of 1 212 words English (United States) Focus + 115%Excel File Edit View Insert Format Tools Data Window Help 13% Fri 9:16 PM Q O E AutoSave ON A 3 6 - 5 - 3 Ch 11 Ex - Last Modified: 5m ago Home Insert Draw Page Layout Formulas Data Review View Share Comments A A = ab v Conditional Formatting Insert v Format as Table v x Delete v O Paste BI U V V Q V A v 207 v Cell Styles Format v X v Sort & Find & Ideas Sensitivity Filter Select A66 X V fx Accounting (or unadjusted) Rate of Return: D E F G H I J K L M N O P Q 33 Problem E 34 Hint? 35 a. Calculate the payback period for each investment (show work) 36 37 38 Invest 1 Invest 2 Invest 3 9 Investment Cost 40 Net Cash Inflow 41 42 Payback period (years) 43 Self check (Invest 3): 44 45 b. Calculate the accounting (or unadjusted) rate of return (show work) 46 47 First, you will need to depreciation for each investment 48 Hint ? 49 Invest 1 Invest 2 Invest 3 50 Depreciation 51 Self check (Invest 2): 52 53 Second, calculate after-tax net income Hint ? 54 Invest 1 Invest 2 Invest 3 55 After-tax net income 56 Self check (Invest 1): 57 58 Third, calculate average investmen Hint ? 59 Invest 1 Invest 2 Invest 3 60 Average Investment 61 Self check (Invest 3): 62 63 Finally, calculate Unadjusted (or Accounting) Rate of Return: 64 Hint ? 65 66 Accounting (or unadjusted) Rate of Return: Sheet1 Sheet2 Sheet3 + O + 100%AutoSave ON Ch 11 Ex - Saved Q V Home Insert Draw Page Layout Formulas Data Review View Share Comments VA A ab v Conditional Formatting Insert v EV AC Format as Table EX Delete v Paste IUV V MVA v $ % 9 Cell Styles Format X v Sort & Find & Ideas Sensitivity Filter Select G90 4 X V fx # B C D E F G H J K L M N O P 61 Selfcheck (Invest 3): 62 63 Finally, calculate Unadjusted (or Accounting) Rate of Return: 64 Hint ? 65 66 Accounting (or unadjusted) Rate of Return: 67 Invest 1 Invest 2 Invest 3 68 After-tax net income 69 Annual Avg Investment 70 71 Acctg Rate of Return = 72 Self check: 73 Analysis: 74 75 76 77 78 84 85 86 87 88 89 90 Sheet1 Sheet2 Sheet3 + Enter + 100%