A E C D E F Laurman, Incorporated is considering the following project: Required investment in equipment $2,205,000 Project life 7 Salvage value 225,000 The project would provide net operating income each year as follows: Sales 52,750,000 Variable expenses 1,600,000 Contribution margin $1,150,000 Fixed expenses: Salaries, rent and other fixed out-of pocket costs $520,000 Depreciation 350,000 Total xed expenses 870,000 Net operating income $280,000 LomummthuNH l'l'l'l'l'H (JLhUJNi'D i' 01 l'l' mu Compa nv discount rate 18% NH Du: Required: M ._. [Use cells A4 to C13 from the given information, as well as 324, and A30 to D45 to complete this question. Negative amounts or amounts to be deducted should be input as negative values 22 and will display.r in parentheses.) 23 24 1. Compute the annual net cash inow from the project. 25 26 2. Complete the table to compute the net present value oithe investment. $630,000 A B C D E F M N 25 26 2. Complete the table to compute the net present value of the investment. 27 28 Year (s) 29 Now 1 through 7 7 30 Initial investment ($2,205,000.00) 31 Annual cost savings $630,000.00 Salvage value of the new machine $225,000.00 33 Total cash flows ($2,205,000.00) $630,000.00 $225,000.00 34 Discount factor 1.00000 =1/(1+B18)^B5)/E 18 You must use the =PV function in your formula 35 Present value of the cash flows 36 Net present value 37 38 Use Excel's PV function to compute the present value of the future cash flows 39 Deduct the cost of the investment 40 Net present value 41 42 3. Use Excel's RATE function to compute the project's internal rate of return 43 44 4. Compute the project's payback period. years 45 46 5. Compute the project's simple rate of return. 47 48