Enter the appropriate formula in B 30, 31 and 32 and correct value in B33.

Recommend either accepting or rejecting the project, and explain reasoning. Cite numbers 

Q2a. Which rows contain balance sheet information? Which rows contain income statement information?

Q2b. Explain the difference between the yellow-highlighted row 14 and row 15.

Q2c. Explain the difference between rows 25 and 26.

Q2d. Explain the difference between rows 26 and 27.

Q2e. Enter the appropriate formula in B30, B31, and B32, and the correct value in B33.

Q2f. Recommend either accepting or rejecting the project, and explain your reasoning. Cite specific numbers.

Transcribed Image Text:

B30 Xv fxc A 10 11 12 13 Investment in equipment 14 Net working capital required (total from balance sheet each year) 15 Investment in net working capital 16 Sales 17 Cost of goods sold (includes depreciation) 18 Research & development 19 Selling, general & administrative 20 Launch promotion 21 Income before income taxes 22 Income taxes 23 Net income 24 Depreciation 25 Cash flow from operations 26 Total cash flow 27 Cumulative total cash flow 28 29 30 31 32 33 ($000s) k-wacc NET PRESENT VALUE (NPV) PROFITABILITY INDEX (PI) INTERNAL RATE OF RETURN (IRR) PAYBACK PERIOD (PP) B base year 2010 -$2,200 $5,648 -$5,648 -$7,848 -$7,848 C 2011 $7,322 -$1,674 $21,600 $17,064 $0 $1,806 $300 $2,430 $972 $1,458 $440 $1,898 $225 -$7,624 D By inspection $7,322 $0 ..forecast years........ 2012 2013 $28,000 $22,120 $0 $2,341 $0 8.75% Enter it from previous tab $3,539 $1,416 $2,124 $440 $2,564 $2,564 -$5,060 E $2,877 $4,446 $28,000 $22,120 $0 $2,341 $0 $3,539 $1,416 $2,124 $440 $2,564 $7,009 $1,949 F 2014 G $0 $920 $0 2015 $1,308 $0 $1,569 $1,308 $11,000 $5,000 $8,690 $3,950 $0 $418 $0 $1,390 $632 $556 $253 $834 $379 $440 $440 $1,274 $819 $2,843 $2,127 $4,792 $6,919 H B30 Xv fxc A 10 11 12 13 Investment in equipment 14 Net working capital required (total from balance sheet each year) 15 Investment in net working capital 16 Sales 17 Cost of goods sold (includes depreciation) 18 Research & development 19 Selling, general & administrative 20 Launch promotion 21 Income before income taxes 22 Income taxes 23 Net income 24 Depreciation 25 Cash flow from operations 26 Total cash flow 27 Cumulative total cash flow 28 29 30 31 32 33 ($000s) k-wacc NET PRESENT VALUE (NPV) PROFITABILITY INDEX (PI) INTERNAL RATE OF RETURN (IRR) PAYBACK PERIOD (PP) B base year 2010 -$2,200 $5,648 -$5,648 -$7,848 -$7,848 C 2011 $7,322 -$1,674 $21,600 $17,064 $0 $1,806 $300 $2,430 $972 $1,458 $440 $1,898 $225 -$7,624 D By inspection $7,322 $0 ..forecast years........ 2012 2013 $28,000 $22,120 $0 $2,341 $0 8.75% Enter it from previous tab $3,539 $1,416 $2,124 $440 $2,564 $2,564 -$5,060 E $2,877 $4,446 $28,000 $22,120 $0 $2,341 $0 $3,539 $1,416 $2,124 $440 $2,564 $7,009 $1,949 F 2014 G $0 $920 $0 2015 $1,308 $0 $1,569 $1,308 $11,000 $5,000 $8,690 $3,950 $0 $418 $0 $1,390 $632 $556 $253 $834 $379 $440 $440 $1,274 $819 $2,843 $2,127 $4,792 $6,919 H

Answer rating: 100% (QA)

SOLUTION Q2a Rows 1013 contain balance sheet information while rows 1419 contain income statement in... View the full answer