The Engineering Department at Great Lakes Community College, a taxpayer funded institution, is considering a new...

 

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The Engineering Department at Great Lakes Community College, a taxpayer funded institution, is considering a new Fabrication Lab (Fab Lab) on campus. The cost of designing the Fab Lab and the equipment installation is estimated at $650,000. The equipment would include a 3-D printer and other fabrication machinery. The Engineering Department manager believes that the new Fab Lab would increase enrollment which would increase cash in-flows each year by $175,000. The additional annual costs related to the Fab Lab are estimated at $25,000 for labor (lab technician), $5,000 for repairs & maintenance, $21,000 for supplies and $7,500 for utilities. In order to increase enrollment, the college would need to make the community aware of the new Fab Lab. To do this, the manager is budgeting a total of $24,000 for marketing over the first three years of the project. It is estimated that the Fab Lab would have a useful life of 15 years and at the end of the life, all of the equipment could be sold for $30,000. You work in the Financial Services Office at Great Lakes Community College. The College President, Dr. Salas, has asked you to analyze the project and prepare a memo explaining your results. The college uses a 15% discount rate. You are to: 1. Calculate net cash in-flows for the Fab Lab for each year 2. Calculate Accounting Rate of Return, Payback Period and Net Present Value for the Fab Lab 3. Prepare a brief memo explaining your results and discussing other items to consider when making capital budgeting decisions. Instructions: The calculations must be completed in Excel using formulas. It should be easy to follow and professional in appearance. All calculations should be show to hundredths (i.e., two decimal points). The brief memo is to be included in the Excel workbook in a textbox. The memo must be free of spelling, grammatical and punctuation errors. Extra Credit of 5 points for including the IRR of potential investment, subject to the 20-point limit for the semester. The Engineering Department at Great Lakes Community College, a taxpayer funded institution, is considering a new Fabrication Lab (Fab Lab) on campus. The cost of designing the Fab Lab and the equipment installation is estimated at $650,000. The equipment would include a 3-D printer and other fabrication machinery. The Engineering Department manager believes that the new Fab Lab would increase enrollment which would increase cash in-flows each year by $175,000. The additional annual costs related to the Fab Lab are estimated at $25,000 for labor (lab technician), $5,000 for repairs & maintenance, $21,000 for supplies and $7,500 for utilities. In order to increase enrollment, the college would need to make the community aware of the new Fab Lab. To do this, the manager is budgeting a total of $24,000 for marketing over the first three years of the project. It is estimated that the Fab Lab would have a useful life of 15 years and at the end of the life, all of the equipment could be sold for $30,000. You work in the Financial Services Office at Great Lakes Community College. The College President, Dr. Salas, has asked you to analyze the project and prepare a memo explaining your results. The college uses a 15% discount rate. You are to: 1. Calculate net cash in-flows for the Fab Lab for each year 2. Calculate Accounting Rate of Return, Payback Period and Net Present Value for the Fab Lab 3. Prepare a brief memo explaining your results and discussing other items to consider when making capital budgeting decisions. Instructions: The calculations must be completed in Excel using formulas. It should be easy to follow and professional in appearance. All calculations should be show to hundredths (i.e., two decimal points). The brief memo is to be included in the Excel workbook in a textbox. The memo must be free of spelling, grammatical and punctuation errors. Extra Credit of 5 points for including the IRR of potential investment, subject to the 20-point limit for the semester.

Answer rating: 100% (QA)

Sure I can help you with that Lets start by calculating the net cash inflows for each year and then ... View the full answer