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 make long-term investment decisions years 20. Sales increase per year 5200.000 S/ .000) 19 Lite Period of the time New cost 3) Equipment & Install 4 Reed startups 5) Inventory Increase A u Payable increase 7) Equipsalvage value before tax Berg 560.000) . 25.000 8.00 315.000 sa percent of sales in Year 1) Depreciation (Straight Line/YR Mary Corporate Tax Rate Cast of Capital Discount Ratel ESTIMATING W Outlay Cash Flow Chat Investments: 1) Equipment Cost 2) Shipping and instalost 3) Startup expenses Total Basis Cost (1+2+3) 4) Net Working Capital Total Intl Outlay Operations: Revenue Operating cost Depreciation Net Income Add back Depreciation Total Operating Cash Flow xxx xxxx xxxx xxxx Terminal 1) Change in net WC 2) Salvage value (after tax) $20,000 XXO XX Project Net Cash Flows NPV- Payback 081 Would you accept the project based on NPV, IRR? Would you accept the project based on Payback project cut-off is 3 years? #2 Impact of 2017 Tax Cut Act on Net Income, Cash Flows and Capital Budgeting Investment ) Decisions Estimate NPV, IRR and Payback period of the project guipment is fully deprecated in first year and a u to21%. Would you accept of the project? (D) As a CFO of them , which of the above t o would you choose? Why? #3 How would you explain to your CEO what NPV means? #4 What are advantages and disadvantages of using only Payback method? # What are advantages and disadvantages of using NPV versus IRR? 6 Explain the difference between Independent projects and mutually exclusive projects. When you are confronted with Mutually Exclusive Projects and have contics with NPV and IRR results, which criterion would you use NPV O IRR) and why? 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 make long-term investment decisions years 20. Sales increase per year 5200.000 S/ .000) 19 Lite Period of the time New cost 3) Equipment & Install 4 Reed startups 5) Inventory Increase A u Payable increase 7) Equipsalvage value before tax Berg 560.000) . 25.000 8.00 315.000 sa percent of sales in Year 1) Depreciation (Straight Line/YR Mary Corporate Tax Rate Cast of Capital Discount Ratel ESTIMATING W Outlay Cash Flow Chat Investments: 1) Equipment Cost 2) Shipping and instalost 3) Startup expenses Total Basis Cost (1+2+3) 4) Net Working Capital Total Intl Outlay Operations: Revenue Operating cost Depreciation Net Income Add back Depreciation Total Operating Cash Flow xxx xxxx xxxx xxxx Terminal 1) Change in net WC 2) Salvage value (after tax) $20,000 XXO XX Project Net Cash Flows NPV- Payback 081 Would you accept the project based on NPV, IRR? Would you accept the project based on Payback project cut-off is 3 years? #2 Impact of 2017 Tax Cut Act on Net Income, Cash Flows and Capital Budgeting Investment ) Decisions Estimate NPV, IRR and Payback period of the project guipment is fully deprecated in first year and a u to21%. Would you accept of the project? (D) As a CFO of them , which of the above t o would you choose? Why? #3 How would you explain to your CEO what NPV means? #4 What are advantages and disadvantages of using only Payback method? # What are advantages and disadvantages of using NPV versus IRR? 6 Explain the difference between Independent projects and mutually exclusive projects. When you are confronted with Mutually Exclusive Projects and have contics with NPV and IRR results, which criterion would you use NPV O IRR) and why