You have a project that will generate $250,000 a year for 10 years starting one year from now. Your cost of capital (r) is 5 percent. For this assignment, create an Excel model that will generate a cash flow diagram of these cash flows and value the annuity. Figure 3.2 of your readings shows an example of what a cash flow diagram could look like.

This model should be generic and have the capability to plot other similar cash flows (annuities) of up to 10 years, different cash flow amounts, and different cost of capital (r).

In the spreadsheet, tab 1 should be as described above. Tab 2 should be a ready-to-use generic version of Tab 1 that users could use to solve an annuity. Make sure your model includes instructions and clearly identifies where users would provide inputs.

Please proceed to the Example section.

Here is an example of a diagram for a different assignment. This gives you an idea of what is expected. You may want to consider having the data input in one cell and any tables auto-filled so a user would enter data fewer times which reduces the opportunity for input errors.

Please note: You will be adding to this model in future modules, and you will ultimately have both positive and negative cash flows. Again, your model should work for up to 10 years, and cash flow diagrams and tables should function properly based on the parameters provided.

Capital Costs: Enter any positive or negative cash flows related to investments into the business or returns O&M: Enter any positive or negative cash flows related to operation costs of the business or cash returns on sales Revenue: Enter any positive or negative cash flows related to sale of products or services Overhaul: Enter any positive or negative cash flows related to major capital expenditures during the operating life Salvage: Enter any positive or negative cash flows related to sale of the equipment at project termination

Year	Capital Costs	O&M	Revenue	Overhaul	Salvage
0	-$100,000
1			$30,000
2			$30,000
3			$30,000	-$10,000
4			$30,000
5			$30,000
6			$30,000	-$15,000
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