Qw00001 12 Laurman, Inc. is considering the following project:34 Required investment in equipment5 Project life6 Salvage value78 The project would provide net operating income each year as follows:009 Sales1011121314151617Variable expensesContribution marginFixed expenses:Salaries, rent and other fixed out-of pocket costsDepreciationTotal fixed expensesNet operating income18 Company discount rate1920 Required:2138 Use Excel's PV function to compute the present value of the future cash flows39 Deduct the cost of the investment40 Net present value4142 3. Use Excel's RATE function to compute the project's internal rate of return43444546 5. Compute the project's simple rate of return.47B4. Compute the project's payback period.$2,205,0007225,000$520,000350,00018%(Use cells A4 to C18 from the given information, as well as B24, and A30 to D46 to complete this question. Negative amounts or amounts to be deduct22 and will display in parentheses.)2324 1. Compute the annual net cash inflow from the project.2526 2. Complete the table to compute the net present value of the investment.27282930 Initial investment31 Annual cost savings32 Salvage value of the new machine33 Total cash flows34 Discount factor35 Present value of the cash flows36 Net present value37$630,000Now($2,205,000.00)C$2,750,0001,600,000$1,150,000870,000$280,000years1 through 7Year(s)$630,000.00($2,205,000.00) $630,000.001.00000($2,205,000.00)D7$225,000.00$225,000.00

Internal rate of return refers to that discount rate.

1 2 Laurman, Inc. is considering the following project: 3 4 Required investment in equipment 5 Project life 6 Salvage value 7 8 9 The project would provide net operating income each year as follows: Sales Variable expenses 10 11 Contribution margin 12 13 14 15 16 Fixed expenses: Salaries, rent and other fixed out-of pocket costs Depreciation Total fixed expenses Net operating income Company discount rate 17 18 19 20 Required: 21 29 30 Initial investment 31 Annual cost savings 32 Salvage value of the new machine 33 Total cash flows i 34 Discount factor 35 Present value of the cash flows 36 Net present value 37 38 Use Excel's PV function to compute the present value of the future cash flows 39 Deduct the cost of the investment i 40 Net present value 41 42 3. Use Excel's RATE function to compute the project's internal rate of return 43 44 4. Compute the project's payback period. 45 B 46 5. Compute the project's simple rate of return. 47 $2,205,000 7 225,000 $520,000 350,000 (Use cells A4 to C18 from the given information, as well as B24, and A30 to D46 to complete this question. Negative amounts or amounts to be de 22 and will display in parentheses.) 23 24 1. Compute the annual net cash inflow from the project. 25 26 2. Complete the table to compute the net present value of the investment. 27 28 18% $630,000 Now ($2,205,000.00) $2,750,000 1,600,000 $1,150,000 ($2,205,000.00) 870,000 $280,000 1 through 7 years Year(s) ($2,205,000.00) $630,000.00 1.00000 $630,000.00 D 7 $225,000.00 $225,000.00

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 11MC: Dixon Construction Materials has collected this information: Based on this Information, what is the...