Learning Objectives 1. Understand how to use EXCEL Spreadsheet (a) Develop proforma Income Statement Using Excel Spreadsheet (b) Compute Net Project Cashflows, NPV, and IRR (c) Develop problem-solving and critical thinking skills and m ake long-term investment decisions S 200,000 ) Life Period of the Equipment 4 years 8) Sales for first year (1) 2) New equipment cost 3) Equipment ship & install cost $ (35,000) 10) Operating cost (60% of Sales) 4) Related start up cost 5) Inventory increase 6) Accounts Payable increase 7) Equip. salvage value before tax S 15,000 13) Cost of Capital (Discount Rate 5% (120,000) -60% S(200,000) 9) Sales increase per year $ $ (5,000) (as a percent of sales in Year 1) S 25,000 11) Depreciation (Straight Line)YR S (60,000) $ 5,000?12) Marginal Corporate Tax Rate ( 21% 10% ESTIMATING Initial Outlay (Cash Flow, CFo, T 0) CFO CF1 CF2 CF3 CF4 ear nvestments: 1) Equipment cost 2) Shipping and Install cost 3) Start up expenses