XI - Week 3 HW#2 cash flows and discounting to post - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View OX Int! AutoSum * Cut Ea Copy * Calibri - 11 A > Wrap Text General Fill - Paste BI U Merge & Center $ % +.0 .00 .00.0 Insert Delete Format Format Painter Conditional Format Cell Formatting as Table Styles Styles 2 Clear Sort & Find & Filter - Select Editing Clipboard Font Alignment Number Cells P61 B A D E F G H 1 J K L M N P Q R SP Tax rate 35% a. Given the available information, what are the free cash flows in years 0 through 10 that should be used to evaluate the proposed project? 32 33 34 35 36 37 38 39 40 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 0 -$25,000 -$10.000 $30,000 $18,000 $30,000 $18,000 $30,000 $18,000 $30,000 $18,000 $30,000 $18,000 $30,000 $18,000 $30,000 $18,000 $30,000 $18,000 $30,000) $18,000 $10,000 $30,000 $18,000 41 42 43 44 45 $2,000 $2.000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 46 47 48 Cost of machine Change in net working capital Sales revenue Minus cost of goods sold Equals gross profit Minus General, sales and administrative expense Plus overhead that would have occurred anyway Minus depreciation Equals net operating income Minus income tax Equals Net income Plus depreciation Cost of machine plus change in net working capital Equals cash flow $1,000 $2,5001 $1,000 $2,500 $1,000 $2,500 $1,000 $2.5001 $1,000 $2.5001 $1,000 $2,500 $1,000 $2,500 $1,000 $2.5001 $1,000 $2.5001 $1,000 $2,500 49 50 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $10,000 b. If the cost of capital for this project is 14%, what is your estimate of the value of the new project? 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 Cost of capital NPV 14% Activate Windows Go to Settings to activate Windows. 8-10 Ready BO. 60% + Type here to search e W ga -- ENG 10:17 AM 1/18/2021 K XI - Week 3 HW#2 cash flows and discounting to post - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View OX Int! AutoSum * Cut Ea Copy * Calibri - 11 A > Wrap Text General Fill - Paste BI U Merge & Center $ % +.0 .00 .00.0 Insert Delete Format Format Painter Conditional Format Cell Formatting as Table Styles Styles 2 Clear Sort & Find & Filter - Select Editing Clipboard Font Alignment Number Cells P61 B A D E F G H 1 J K L M N P Q R SP Tax rate 35% a. Given the available information, what are the free cash flows in years 0 through 10 that should be used to evaluate the proposed project? 32 33 34 35 36 37 38 39 40 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 0 -$25,000 -$10.000 $30,000 $18,000 $30,000 $18,000 $30,000 $18,000 $30,000 $18,000 $30,000 $18,000 $30,000 $18,000 $30,000 $18,000 $30,000 $18,000 $30,000) $18,000 $10,000 $30,000 $18,000 41 42 43 44 45 $2,000 $2.000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 46 47 48 Cost of machine Change in net working capital Sales revenue Minus cost of goods sold Equals gross profit Minus General, sales and administrative expense Plus overhead that would have occurred anyway Minus depreciation Equals net operating income Minus income tax Equals Net income Plus depreciation Cost of machine plus change in net working capital Equals cash flow $1,000 $2,5001 $1,000 $2,500 $1,000 $2,500 $1,000 $2.5001 $1,000 $2.5001 $1,000 $2,500 $1,000 $2,500 $1,000 $2.5001 $1,000 $2.5001 $1,000 $2,500 49 50 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $10,000 b. If the cost of capital for this project is 14%, what is your estimate of the value of the new project? 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 Cost of capital NPV 14% Activate Windows Go to Settings to activate Windows. 8-10 Ready BO. 60% + Type here to search e W ga -- ENG 10:17 AM 1/18/2021 K