Assignment #5 Work this problem out using an Excel spreadsheet. Short answer questions can be answered...

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Assignment #5 Work this problem out using an Excel spreadsheet. Short answer questions can be answered right in a cell in the spreadsheet so you just have to submit one file (your spreadsheet). You should only have to set the problem up one time, but remember, you will need a net operating cash flow column (for payback period and SRR calculations) and a net total cash flow column (for NPV and IRR calculations) You are considering purchasing a machine that will initially cost $225,000.00. The machine is expected to last 8 years, and you project that you can sell the worn out machine at the end of 8 years for $68,000.00 Annual operating cash inflows and outflows are projected as follows, and are assumed to occur at the end of each year: Years 1 and 2, cash inflow $46,000.00, cash operating expenses $25,000.00; years 3 and 4, cash inflow $61,000.00, cash operating expenses $27,000.00; years 5 and 6, cash inflow $63,000.00, cash operating expenses $29,500.00; and years 7 and 8, cash inflow $64,000.00, cash operating expenses $31,000.00. 1. What is the calculated payback period for this proposed investment? 1.b. If the required payback period for your firm is 8 years, would you purchase this machine? Why or why not? 2. What is the calculated simple rate of return for this proposed investment? 2.b. If the required simple rate of return for your firm is 5%, would you purchase this machine? Assignment #5 Work this problem out using an Excel spreadsheet. Short answer questions can be answered right in a cell in the spreadsheet so you just have to submit one file (your spreadsheet). You should only have to set the problem up one time, but remember, you will need a net operating cash flow column (for payback period and SRR calculations) and a net total cash flow column (for NPV and IRR calculations) You are considering purchasing a machine that will initially cost $225,000.00. The machine is expected to last 8 years, and you project that you can sell the worn out machine at the end of 8 years for $68,000.00 Annual operating cash inflows and outflows are projected as follows, and are assumed to occur at the end of each year: Years 1 and 2, cash inflow $46,000.00, cash operating expenses $25,000.00; years 3 and 4, cash inflow $61,000.00, cash operating expenses $27,000.00; years 5 and 6, cash inflow $63,000.00, cash operating expenses $29,500.00; and years 7 and 8, cash inflow $64,000.00, cash operating expenses $31,000.00. 1. What is the calculated payback period for this proposed investment? 1.b. If the required payback period for your firm is 8 years, would you purchase this machine? Why or why not? 2. What is the calculated simple rate of return for this proposed investment? 2.b. If the required simple rate of return for your firm is 5%, would you purchase this machine?