Question: Excel formula, please. F G E 1 Data for capital investment problem NPV approach to capital budgeting 2 4 Investment Opportunity: Purchase Price: Useful Life:

Excel formula, please.

Excel formula, please. F G E 1 Data for capital investment problem

F G E 1 Data for capital investment problem NPV approach to capital budgeting 2 4 Investment Opportunity: Purchase Price: Useful Life: Cost of Capital: Whatchit $25,000 5 years 9.00% 5 PV 7 7. YEAR 0 1 2 E Data: Cash in 0 6,000 8,000 9,000 7,000 18,000 Cash out Net Flow $25,000 $ (25,000) 3,000 3,000 3,000 5,000 3,000 6,000 3,000 4,000 3,000 15,000 $ 8,000 10 3 11 Summary of annual cash flows 4 5 12 NPV 13 14 YEAR 0 1 2 15 15 Cash in Cash out $25,000 $ 6,000 3,000 8,000 3,000 9,000 3,000 7,000 3,000 18,000 3,000 $ Net Flow (25,000) 3,000 5,000 6,000 4,000 15,000 8,000 IRR approach to capital budgeting 17 3 13 Input the assumed cost of capital 4 5 19 20 21 PV Instructions: 22 23 24 Analyze this investment opportunity and make a recommendation using the following 2 methods: YEAR 0 1 2 3 4 5 5 NPV CASH IN CASH OUT NET FLOW 25,000 (25,000) 6,000 3,000 3,000 8,000 3,000 5,000 9,000 3,000 6,000 7,000 3,000 4,000 18,000 3,000 15,000 $ 8,000 25 26 27 * NPV * IRR 20 29 (must be 0) 31 Invest or not? 32

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