PLEASE INCLUDE EXCEL FUNCTIONS

Learning Objectives 1. Understand how to use Excel spreadsheet (a) Develop proforma Project Income Statement Using Excel Spreadsheet (b) Compute Net Project Cash flows, NPV, IRR and PayBack Period (c) Develop Problem-Solving and Critical Thinking Skills \begin{tabular}{lrrrrrr} 1) Life Period of the Equipment =4 years & \multicolumn{2}{c|}{ 7) Sales increase per year } & 5% \\ 2) New equipment cost & $ & (200,000) & 8) Operating cost: & $(120,000) \\ 3) Equipment ship \& install cost & $ & (35,000) & (60 Percent of Sales) & 60% & \\ 4) Related start up cost & $ & (5,000) 9) Depreciation (Straight Line)/YR & $60,000) \\ 5) Equip. Salvage Value & $ & 15,000 & 10) Corporate Marginal Tax Rate & 21% \\ 6) Sales for first year (1) & $ & 200,000 & 11 ) Cost of Capital (WACC) & 10% \end{tabular} ESTIMATING Initial Outlay (Cash Flow, CFo, T =0 ) Year Investments: 1) Equipment cost 2) Shipping and Install cost 3) Start up expenses Total Basis Cost (1+2+3) \$ (240,000) TotalInitialOutlay$(240,000) overautis: Q\#1 Would you accept the project based on NPV, IRR? Would you accept the project based on Payback rule if project cut-off is 3 years? Q\#2 How would you explain to your CEO what NPV means? Q\#3 What are advantages and disadvantages of using only Payback method? Q\#4 What are advantages and disadvantages of using NPV versus IRR? Q\#5 Explain the difference between independent projects and mutually exclusive projects. When you are confronted with Mutually Exclusive Projects and have coflicts with NPV and IRR results, which criterion would you use (NPV or IRR) and why