Calculate the followings requirements. 11 12 B 13 14 The system will cost 15 Useful life 16

Calculate the followings requirements.

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11 12 B 13 14 The system will cost 15 Useful life 16 Salvage value 17 Discount rate or Cost of Capital 18 Tax Rate 19 Depreciation method 20 с 7 ABC Company is considering the purchase of a computer-aided manufacturing system. 8 The annual before tax cash benefits/savings associated with the system are described below: 9 10 1 Part 1 2 You will be graded based off your usage of excel and the accuracy of your answer. 3 You are required to use the NPV and IRR functions that are available through excel. DO NOT use the PV table figures. 4 Please make sure you look at the demonstration exercise I have posted for chapter 15 support folder. 5 You need to use cell references and functions whenever possible. 6 33 34 35 D E Decreased Waste cost Decrease in operating costs Increase in on-time deliveries savings $500,000 8 years 0 Straight line 45 46 17 F $55,000 25,000 39,000 23 1. Prepare a time line for displaying cash flows. Be certain to consider the effects of taxes. 24 25 36 3. Calculate the after-tax NPV on the project using the NPV function in Excel. 37 G 10% 28% Hint: Don't forget to compute net of tax amount. Look at pages 15-12 to 15-15. Hint: Don't forget the depreciation tax shield. H 26 27 28 29 30 2. Calculate the payback period for the system. Assume that the company has a policy of only accepting 31 projects with a payback of 5 years or less. Should the company buy the system based on the payback period criteria? Why? 32 38 39 4. Calculate the IRR for this project using the IRR function in Excel. 40 41 42 43 5. Should the system be purchased based on the NPV and IRR criteria? Why or Why not? 44 J K L M N 0 You should use plain straight-line depreciation, so do not use first year half year depreciation. 21 Required: Use cell references to link to the data above. The demonstration problem for chapter 15 would be a good model to use, but remember you should not be using the table figures but using the NPV, IRR, and PV functions using Excel. 22 P Q R S T U V 11 12 B 13 14 The system will cost 15 Useful life 16 Salvage value 17 Discount rate or Cost of Capital 18 Tax Rate 19 Depreciation method 20 с 7 ABC Company is considering the purchase of a computer-aided manufacturing system. 8 The annual before tax cash benefits/savings associated with the system are described below: 9 10 1 Part 1 2 You will be graded based off your usage of excel and the accuracy of your answer. 3 You are required to use the NPV and IRR functions that are available through excel. DO NOT use the PV table figures. 4 Please make sure you look at the demonstration exercise I have posted for chapter 15 support folder. 5 You need to use cell references and functions whenever possible. 6 33 34 35 D E Decreased Waste cost Decrease in operating costs Increase in on-time deliveries savings $500,000 8 years 0 Straight line 45 46 17 F $55,000 25,000 39,000 23 1. Prepare a time line for displaying cash flows. Be certain to consider the effects of taxes. 24 25 36 3. Calculate the after-tax NPV on the project using the NPV function in Excel. 37 G 10% 28% Hint: Don't forget to compute net of tax amount. Look at pages 15-12 to 15-15. Hint: Don't forget the depreciation tax shield. H 26 27 28 29 30 2. Calculate the payback period for the system. Assume that the company has a policy of only accepting 31 projects with a payback of 5 years or less. Should the company buy the system based on the payback period criteria? Why? 32 38 39 4. Calculate the IRR for this project using the IRR function in Excel. 40 41 42 43 5. Should the system be purchased based on the NPV and IRR criteria? Why or Why not? 44 J K L M N 0 You should use plain straight-line depreciation, so do not use first year half year depreciation. 21 Required: Use cell references to link to the data above. The demonstration problem for chapter 15 would be a good model to use, but remember you should not be using the table figures but using the NPV, IRR, and PV functions using Excel. 22 P Q R S T U V

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ANSWER Time Line for displaying cash flows Year Cash Flows Depreciation Tax Shield AfterTax Cash Flo... View the full answer