B C 3 Excel on-line Problems using payback and discounted cash flow analysis A D E F 4 5 Q1 You are evaluating payback on a project. 6 7 8 9 0 Q2 11 12 13 4 15 16 Q3 17 18 19 20 21 22 23 Q4 241 25 26 27 28 29 30 31 Q5 82 33 34 The initial investment is $3000. The project reduces cost $500/year. How many years to payback? You are evaluating payback on a project. The initial investment is $45000. The project reduces cost $6500/year. You will only accept projects with payback under 7 years. Does this project meet the payback test? You are evaluating two projects to determine which has the highest present value. Your cost of capital is 10% Project A will generate additional margin of $7,500 a month for 5 years. Project B will generate cost savings of $6,000 a month for 7 years. Which project offers the highest present value A or B? You are evaluating two projects to determine which has the lowest present value of costs. Your cost of capital is 12% Project A requires an initial investment of $200,000. Project B initial cost is $0. Project A will increase costs $45,000 a year for 5 years. Project B will increase costs $75,000 a year for 7 years. Which project has the lowest present value of costs A or B? You are evaluating the benefit of a new piece of equipment. The cost is $225,000. The useful life of the equipment is 6 years. The company cost of capital is 4%. 6. 6.923076923 +