Chapter 26

Using Excel

P26-39 Using Excel for capital budgeting calculations

Glacier Creek Textiles is planning to purchase new manufacturing equipment. The equipment has an acquisition cost of $100,000, an estimated useful life of five years and no residual value. The company uses a 12% rate of return to evaluate capital projects. The cash flows for the five years:

please help me by showing at the work as well, i would really appreciate it!

Chapter 26 Using Excel P26-39 Using Excel for capital budgeting calculations Glacier Creek Textiles is planning to purchase new manufacturing equipment. The equipment has an acquisition cost of $100,000, an estimated useful life of five years and no residual value. The company uses a 12% rate of return to evaluate capital projects. The cash flows for the five years: Requirements 1. Compute the accounting rate of return. 2. Compute the net present value of the investment using Excel's NPV function. 3. Compute the profitability index, rounded to two decimal places. 4. Compute the internal rate of return of the investment using Excel's laR function. Display to two decimal places, but do not round. Excel skills 1. Function NPV 2. Function IRR Evaluate Glacier Creek Textiles' new manufacturing equipment. Requirement 1 Compute the Accounting Rate of Return Requirement 2 Compute the net present value of the investment using Excel's NPV function Requirement 1 Compute the Accounting Rate of Return Requirement 2 Compute the net present value of the investment using Excel's Niy function Requirement 3. Compute the profitability index, rounded to two decimal plsces. Requirement 4 Compute the internal rate of return of the investment using Excel's IRR function. Display to two decimat places, but do not round. ote: IAR requires a negative amount for the investment