Saved Help Save & Exit Submit Al Laurman, Inc. is considering the following project: B D $ 1 Laurman, Inc. is considering the following project: 2 Required investment in equipment Project life Salvage value 1,750,000 years 225,000 5 $ 2,750,000 1,600,000 1,150,000 S The project would provide net operating income each year as follows: Sales Variable expenses Contribution margin Fixed expenses: Salaries, rent and other fixed out of pocket costs Depreciation Total fixed expenses Net operating income 520,000 350,000 3 870,000 280,000 18% Cost of Capital 1. Compute the annual net cash inflow from the project. 2. Complete the following timeline to compute the net present value of the future cash flows for this project. Don't forget to include the salvage value in year 5. Year 2 Net cash flow *** Sheet1 tempt(s) Prey 1 of 1 Next A B D E 22 19 20 2. Complete the following timeline to compute the net present value of the future cash flows for this project. Don't forget to include the salvage 21 Year 0 1 2 23 Net cash flow 24 Discount Factor = 1/((1+r)^n) 1.000 25 Present value of the cash flows 26 Net present value 27 28 3. Use Excel's NPV function to compute the present value of the cash flows from years 1-5. Do not include the original investment at time zero 29 NPV of Cash Flows from Years 1-5 30 Deduct the cost of the investment 31 Net present value 32 Write an if/then statement to ACCEPT or REJECT the project based on NPV 33 34 4. Use Excel's IRR function to compute the project's internal rate of return 35 Write an if/then statement to ACCEPT or REJECT the project based on IRR 36 37 5. Compute the project's payback period. 38 39 6. Compute the project's accounting rate of return. years 40 41 Sheet1 READY Attempt(s)