4 9 5 1. Understand how to use EXCEL Spreadsheet 6 (a) Develop proforma Income Statement Using Excel Spreadsheet 7 (b) Compute Net Project Cashflows, NPV, and IRR 8 (c) Develop problem-solving and critical thinking skills and make long-term investment decisions 10 11 1) Life Period of the Equipment = 4 years 8) Sales for first year (1) 12 2) New equipment cost $ (200,000) 9) Sales increase per year 13 3) Equipment ship & install cost $ (35,000) 10) Operating cost (60% of Sales) 14 4) Related start up cost $ (5,000) (as a percent of sales in Year 1) 15 5) Inventory increase $ 25,000 11) Depreciation (Straight Line)/YR 16 6) Accounts Payable increase $ 5,000 12) Marginal Corporate Tax Rate (T) 17 7) Equip. salvage value before tax $ 15,000 13) Cost of Capital (Discount Rate) = $ $ 200,000 5% (120,000) -60% (60,000) 21% 10% $ 18 19