Laurman, Inc. is considering a new project and has provided the details of the project. The Controller has asked you to compute various capital budgeting methods to help aid in the decision to pursue the investment. Use the information included in the Excel Simulation and the Excel functions described below to complete the task.

X S ? X . HOME Comparison of Capital Budgeting Methods - Excel PAGE LAYOUT FORMULAS DATA REVIEW VIEW - . Sign In FILE INSERT Calibri 11 F- A A - A Paste B I U - Alignment Number Conditional Format as Cell Formatting Table Styles Styles Cells - Editing Clipboard Font E28 2,205,000 1 Laurman, Inc. is considering the following project: 2 Required investment in equipment 3 Project life 4 Salvage value 225,000 2,750,000 1,600,000 1,150,000 6 The project would provide net operating income each year as follows: 7 Sales 8 Variable expenses Contribution margin Fixed expenses: 11 Salaries, rent and other fixed out-of pocket costs Depreciation Total fixed expenses Net operating income 520,000 350,000 870,000 280.000 16 Company discount rate 18% 18 1. Compute the annual net cash inflow from the project. 20 2. Complete the table to compute the net present value of the investment. Year(s) Now 1-7 1 ... Sheet1 ... READY @ D -- + 100% ? 7 X - Sign In FILE INSERT HOME Calibri B I Comparison of Capital Budgeting Methods - Excel PAGE LAYOUT FORMULAS DATA REVIEW VIEW 11 A A - - A Alignment Number Conditional Format as Cell Formatting Table Styles Styles U Cells Editing Clipboard Font E28 23 Now 1-7 24 Initial investment 25 Annual cost savings 26 Salvage value of the new machine 27 Total cash flows 28 Discount factor 1.000 29 Present value of the cash flows 30 Net present value 31 Use Excel's PV function to compute the present value of the future cash flows 33 Deduct the cost of the investment 34 Net present value 36 3. Use Excel's RATE function to compute the project's internal rate of return 38 4. Compute the project's payback period. years 40 5. Compute the project's simple rate of return. ... Sheet1 ... + READY 1 0 0 -- + 100%