1. Understand how to use EXCEL Spreadsheet (a) Develop proforma Income Statement Using Excel Spreadsheet (b) Compute Net Project Cashflows, NPV, and IRR (c) Develop problem-solving and critical thinking skills and make long term investment decisions 200.000 1) Life Period of the Equipment 4 years 2) New equipment cost 3) Equipment ship & Install cost 4) Related start up cost $ 120,000 $ 200,000 ($35,000) $5.000) 525.000 $5,000 $15.000 8) Sales for first year (1) 9) Sales increase per year 10) Operating con 100% of Sales) (as a percent of sales in Year 1) 11) Depreciation 12) Marginal Corporate Tax Rate (U! 13) Cost of Capital Discount Rate) 6) Accounts Payable increase 7) Equip. salvage value before tax Filming data in the cells colored only. Do not wife in any others Do not delete any row or column ESTIMATING Initial Outlay (Cash Flow. CF, T-D) CFO CE1CF2CF3CF4 H Investments: 1) Equipment cost 2) Shipping and Install cost 3) Start up expenses Total Basis Cosi (1-2-31 4) Net Working Capital Total initial Outlay ILL wollen Depreciation calculation Operations: Revenue Operating Cost Depreciation Depreciation Basis: w of years: Macrs EBIT Net Income Year Basis Macrs % Depreciation Add back Depreciation Total Operating Cash Flow Terminal al AS 1) Change in ner WC 2) Salvage value (after tax) Total Salvage value*(1. marginal tax rate) Project Net Cash Flows NPV = $0.00 Paybacken Pawback Period Profitability Index - Discounted Payback 0.00 Projected CF Cumulative CF C ount PLEASE RESPOND TO THESE QUESTIONS ON ANOTHER TAB Q#2 counted Payback Period Would you accept the project based on NPV, IRR? Would you accept the project based on Payback rule if project cut-off is 3 years? Impact of 2017 Tax Cut Act on Net Income, Cash Flows and Capital Budgeting Investment) Decisions (a) Estimate NPV, IRR and Payback period of the project if tax rate equals to 21S. Would you accept or reject the project? As a CFO of the firm, which of the above two scenarios (1) or (2) would you chaos? Why? ON3 How would you explain to your CEO what NPV means? #4 What are advantages and disadvantages of using only Payback method? #5 What are advantages and disadvantages of using NPV versus IRR? ON6 Explain the difference between independent projects and mutually exclusive projects. When you are confronted with Mutually Exclusive Projects and have coflicts with NPV and IRR results, which criterion would you use INPV or IRR) and why? Cambos internet camar 1. Understand how to use EXCEL Spreadsheet (a) Develop proforma Income Statement Using Excel Spreadsheet (b) Compute Net Project Cashflows, NPV, and IRR (c) Develop problem-solving and critical thinking skills and make long term investment decisions 200.000 1) Life Period of the Equipment 4 years 2) New equipment cost 3) Equipment ship & Install cost 4) Related start up cost $ 120,000 $ 200,000 ($35,000) $5.000) 525.000 $5,000 $15.000 8) Sales for first year (1) 9) Sales increase per year 10) Operating con 100% of Sales) (as a percent of sales in Year 1) 11) Depreciation 12) Marginal Corporate Tax Rate (U! 13) Cost of Capital Discount Rate) 6) Accounts Payable increase 7) Equip. salvage value before tax Filming data in the cells colored only. Do not wife in any others Do not delete any row or column ESTIMATING Initial Outlay (Cash Flow. CF, T-D) CFO CE1CF2CF3CF4 H Investments: 1) Equipment cost 2) Shipping and Install cost 3) Start up expenses Total Basis Cosi (1-2-31 4) Net Working Capital Total initial Outlay ILL wollen Depreciation calculation Operations: Revenue Operating Cost Depreciation Depreciation Basis: w of years: Macrs EBIT Net Income Year Basis Macrs % Depreciation Add back Depreciation Total Operating Cash Flow Terminal al AS 1) Change in ner WC 2) Salvage value (after tax) Total Salvage value*(1. marginal tax rate) Project Net Cash Flows NPV = $0.00 Paybacken Pawback Period Profitability Index - Discounted Payback 0.00 Projected CF Cumulative CF C ount PLEASE RESPOND TO THESE QUESTIONS ON ANOTHER TAB Q#2 counted Payback Period Would you accept the project based on NPV, IRR? Would you accept the project based on Payback rule if project cut-off is 3 years? Impact of 2017 Tax Cut Act on Net Income, Cash Flows and Capital Budgeting Investment) Decisions (a) Estimate NPV, IRR and Payback period of the project if tax rate equals to 21S. Would you accept or reject the project? As a CFO of the firm, which of the above two scenarios (1) or (2) would you chaos? Why? ON3 How would you explain to your CEO what NPV means? #4 What are advantages and disadvantages of using only Payback method? #5 What are advantages and disadvantages of using NPV versus IRR? ON6 Explain the difference between independent projects and mutually exclusive projects. When you are confronted with Mutually Exclusive Projects and have coflicts with NPV and IRR results, which criterion would you use INPV or IRR) and why? Cambos internet camar