Year(s) 1-7 S Now (2,205,000.00) 630,000.00 24 Initial investment 25 Annual cost savings 26 Salvage value of the new machine 27 Total cash flows 28 Discount factor 29 Present value of the cash flows 30 Net present value $ 630,000.00 225,000.00 225,000.00 $ (2,205,000.00) S 1.000 (2,205,000.00) 31 32 Use Excel's PV function to compute the present value of the future cash flows 33 Deduct the cost of the investment 34 Net present value $ 2,205,000.00 36 3. Use Excel's RATE function to compute the project's internal rate of return 38 |4. Compute the project's payback period. 40 5. Compute the project's simple rate of return