Question

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& Formatting Table Styles Styles Clipboard Font 028 4 D E 2.750.000 1.600.000 1.150.000 $ А B 1 Laurman, Inc. is considering the following project: 2 Required investment in equipment $ 2.205.000 3 Project life 7 4 Salvage value 225.000 5 The project would provide net operating income each year as follows: 7 Sales 8 Variable expenses 9 Contribution margin 10 Fixed expenses: 11 Salaries, rent and other fixed out of pocket costs $ $20.000 12 Depreciation 350/000 13 Total fixed expenses 14 Net operating income 15 16 Company discount rate 189 17 18 1. Compute the annual net cash inflow from the project. 19 20 2. Complete the table to compute the net present value of the investment 21 22 Years 23 Now 12 870,000 280,000 630XXO 2 Sheet1 READY + 100%

Answer 1

XI - 31.07.2020 (2) - 1 Ques - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Developer Acrobat Personal Macro O x Auto Sum Calibri 11 A Wrap Text General H Fill - BI U * Cut E Copy Paste Format Painter Clipboard J9 А Merge & Center - % +.0 .00 .00.0 Insert Delete Format Conditional Format Cell Formatting as Table Styles Styles Clear Sort & Find & Filter - Select Editing Font Alignment Number Cells B с D E F G H K L M $ 22,05,000 7 $ 2,25,000 $ $ $ 27,50,000 16,00,000 11,50,000 A 1 Laurman, Inc. is considering the following projects: 2 Requirement Investment in Equipment 3 Project Life 4 Salvage Value 5 6 The project would provide net operating income as follows: 7 Sales 8 Variable expenses 9 Contribution Margin 10 Fixed Expenses: 11 Salaries, rent and other fixed out of pocket-costs 12 Depreciation 13 Total Fixed Expenses 14 Net Operating Income 15 16 Company Discount rate 17 1. Annual Net Cash Outflow from project 18 (Net Opearting Income +Depreciation) 19 20 2. NPV of the Investment $ $ 5,20,000 3,50,000 $ $ 8,70,000 2,80,000 18% $ 6,30,000 21 22 7 23 24 Initial Investment 3. Costing - Daks Q4. Cash Flow Statement Ready Year(s) Now 1-7 $ -22,05,000 5. Costing 6. Costing 7. Debt Ratio 8. NPV 100% - e x ENG IN 03:00 01-08-2020

XI - 31.07.2020 (2) - 1 Ques - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Developer Acrobat Personal Macro O x Auto Sum Calibri 11 A Wrap Text General H Fill - * Cut E Copy Paste Format Painter Clipboard J9 BIU А Merge & Center - % +.0 .00 .00.0 Insert Delete Format Conditional Format Cell Formatting as Table Styles Styles Clear Sort & Find & Filter - Select Editing Font Alignment Number Cells A B с D E F G H J к L M 19 $ $ 20 2. NPV of the Investment 21 22 Year(s) 23 Now 1-7 7 24 Initial Investment $ -22,05,000 25 Annual Cost savings $ 6,30,000 26 Salvage value of new machine 2,25,000 27 Total cash Flows $ -22,05,000 $ 6,30,000 $ 2,25,000 28 Discount Factor 1 3.81153 0.31393 29 Present Value of Cah flows $ -22,05,000 $ 24,01,262 $ 70,633 30 Net Present Value 2,66,896 31 32 Use Excel's PV function to compute the present value of future cash flows $ 24,71,896 33 Deduct the cost of Investment $ 22,05,000 34 Net Presnt Value $ 2,66,896 35 36 3. Use Excels RATE Function to compute the project's internal rate of return 22.04% 37 38 4. Compute the pay back period 3.50 years 39 40 5. Compute the projects simple rate of return 12.70% 41 42 Let me know, if you have any questions over comments section, rate positive if you are satisfied with the solution 43 KM 3. Costing - Daks Q 4. Cash Flow Statement 5. Costing 6. Costing 7. Debt Ratio 8. NPV Ready 100% - F e x ENG IN 03:00 01-08-2020

File A O x fic Calculate Now 31.07.2020 (2) - 1 Ques - Microsoft Excel (Product Activation Failed) Home Insert Page Layout Formulas Data Review View Developer Acrobat Personal Macro Σ Pa Define Name Trace Precedents Show Formulas f Use in Formula Trace Dependents Error Checking AutoSum Recently Financial Logical Text Date & Lookup & Math & More Name Watch Used Time Reference Trigº Functions Manager Create from Selection Remove Arrows → Evaluate Formula Evaluate Formula Window Function Library Defined Names Formula Auditing F21 fox Insert Function Calculation Calculate Sheet Options Calculation B С D F F G 2205000 7 225000 2750000 1600000 =D7-D8 А. 1 Laurman, Inc. is considering the following projects: 2 Requirement Investment in Equipment 3 Project Life 4 Salvage Value 5 6 The project would provide net operating income as follows: 7 Sales 8 Variable expenses 9 Contribution Margin 10 Fixed Expenses: 11 Salaries, rent and other fixed out of pocket-costs 12 Depreciation 13 Total Fixed Expenses 14 Net Operating Income 15 16 Company Discount rate 17 1. Annual Net Cash Outflow from project 18 (Net Opearting Income +Depreciation) 19 20 2. NPV of the Investment 520000 350000 =SUM(C11:C12) =D9-D13 0.18 =D14+C12 21 22 Year(s) 1-7 7 Now --C2 23 24 Initial Investment 3. Costing - Daks Q4. Cash Flow Statement Ready 5. Costing 6. Costing 7. Debt Ratio 8. NPV D BO 100% - e X ENG IN 03:01 01-08-2020

File A O x fic 31.07.2020 (2) - 1 Ques - Microsoft Excel (Product Activation Failed) Home Insert Page Layout Formulas Data Review View Developer Acrobat Personal Macro Σ Pa Define Name Trace Precedents Show Formulas f Use in Formula Trace Dependents Error Checking AutoSum Recently Financial Logical Text Date & Lookup & Math & More Name Watch Used - Time Reference Trigº Functions Manager Create from Selection Remove Arrows → Evaluate Formula Evaluate Formula Window Function Library Defined Names Formula Auditing Calculate Now Insert Function Calculation Calculate Sheet Options Calculation F21 A B C D E F G 19 20 2. NPV of the Investment 21 22 Year(s) 23 Now 1-7 7 24 Initial Investment --C2 25 Annual Cost savings =D18 26 Salvage value of new machine =C4 27 Total cash Flows =SUM(B24:326) =SUM(C24:C26) =SUM(D24:D26) 28 Discount Factor 1 =(1/B16)*(1-(1/(1+B16)^C3)) =1/(1+B16)^C3 29 Present Value of Cah flows =B27*B28 =C27*C28 =D27*D28 30 Net Present Value =SUM(B29:029) 31 32 Use Excel's PV function to compute the present value of future cash flows --PV(B16,C3,D18,C4) 33 Deduct the cost of Investment =C2 34 Net Presnt Value =D32-D33 35 36 3. Use Excels RATE Function to compute the project's internal rate of return =RATE(C3,D18,-C2,C4,0) 37 38 4. Compute the pay back period =C2/D18 39 40 5. Compute the projects simple rate of return D14/12 41 42 Let me know, if you have any questions over comments section, rate positive 43 KM 3. Costing - Daks Q 4. Cash Flow Statement 5. Costing 6. Costing 7. Debt Ratio 8. NPV Ready F e x years 100% - ENG IN 03:01 01-08-2020