I need help with the attached empty fieldsLaurman, Incorporated is considering a new project and has provided the details of the project. The Controller has asked you to compute various capital budgeting methods to help aid in the decision to pursue the investment.Cell Reference: Allows you to refer to data from another cell in the worksheet. If you entered “=B5” into a blank cell, the formula would output the value from cell B5.Basic Math Functions: Allow you to use the basic math symbols to perform mathematical functions. You can use the following keys: + (plus sign to add), - (minus sign to subtract), * (asterisk sign to multiply), and / (forward slash to divide). For example, if you entered “=B4+B5” in a blank cell, the formula would add the values from those cells and output the result.SUM Function: Allows you to refer to multiple cells and adds all the values. You can add individual cell references or ranges. If you entered “=SUM(C4,C5,C6)” into a blank cell, the formula would output the result of adding those three separate cells. Similarly, if you entered “=SUM(C4:C6)”, the formula would output the same result of adding those cells.RATE Function: Allows you to return the interest rate per period. The syntax of the RATE function is “=RATE(nper,pmt,pv,[fv],[type],[guess])” the result is the percentage interest rate value for the related inputs. The nper argument is the total number of payment periods. The pmt argument is the payment made each period that does not change over the life of the investment and this argument must be included if the [fv] argument is not included. The pv argument is the present value, or the total amount that series of future payments is worth now. The [fv] argument is the future value, or the cash basis to attain after the last payment is made and this argument must be included if the pmt argument is omitted. The [type] argument is a logical value of 0 or 1, which indicates when the payments are due where 1 is the payment at the beginning of the period and 0, is the payment at the end of the period. Both the [fv] and [type] values are optional arguments to have the formula work, which is why they are surrounded by brackets in the syntax, however, these values would not be entered with brackets in the actual function. The [guess] argument is also optional and is your guess for what the rate will be, however, if omitted the system assumes a guess of 10 percent. For this assignment, please include both the [pmt] and [fv] arguments, but leave out the [type] and [guess] arguments from the function. Also, the pv argument should be entered as negative value.PV Function: Allows you to perform a present-value calculation.The syntax of the PV function is “=PV(rate,nper,pmt,[fv],[type])” and its output is the total amount that a series of future payments is worth now (also known as the present value). The rate argument is the interest rate per period. The nper argument is the total number of payment periods. The pmt argument is the payment made each period that does not change over the life of the investment, and this argument must be included if the [fv] argument is not included. The [fv] argument is the future value, or the cash basis to attain after the last payment is made; this argument must be included if the pmt argument is omitted. The [type] argument is a logical value of 0 or 1, which indicates when the payments are due, where 1 is the payment at the beginning of the period and 0 is the payment at the end of the period. Both the [fv] and [type] values are optional arguments to include, which is why they are surrounded by brackets in the syntax. However, these values would not be entered with brackets in the actual function Certainly! Here's the transcription of the content in the image formatted for an educational website:---### Project Financial Analysis: Laurnam, IncorporatedLaurnam, Incorporated is considering the following project:- **Required investment in equipment:** $2,205,000- **Project life:** 7 years- **Salvage value:** $225,000#### Projected Net Operating Income (Annual)- **Sales:** $2,750,000- **Variable expenses:** $1,600,000- **Contribution margin:** $1,150,000**Fixed expenses:**- **Salaries, rent and other fixed out-of-pocket costs:** $520,000- **Depreciation:** $350,000- **Total fixed expenses:** $870,000- **Net operating income:** $280,000- **Company discount rate:** 18%#### Required Tasks1. Compute the annual net cash inflow from the project.2. Complete the table to compute the net present value of the investment.---**Instructions:** Use the provided financial figures in cells A4 to C18, B24, and A30 to D46 to complete the calculations. Note that negative amounts or deductions should be entered as negative values and will display in parentheses.**Current Calculation Result:**- **Annual net cash inflow from the project:** $630,000---This information is intended to assist in the financial decision-making process by evaluating the potential profitability and viability of the project based on projected cash inflows and company policies. ### Net Present Value (NPV) Calculation Table#### Instructions1. **Complete the table to compute the net present value of the investment.**#### Table OverviewThe table comprises several financial elements necessary for calculating the net present value (NPV) of an investment.- **Initial Investment** - Now: $(2,205,000.00)- **Annual Cost Savings** - Year(s) 1 through 7: $630,000.00- **Salvage Value of the New Machine** - Year 7: $225,000.00- **Total Cash Flows** - Now: $(2,205,000.00) - Year(s) 1 through 7: $630,000.00 - Year 7: $225,000.00- **Discount Factor** - Now: 1.0000 - Formula for Year(s) 1 through 7: `=1/(1+B18)^B5` - Additional Notes: Ensure to use the discount rate from cell E18.- **Present Value of the Cash Flows** - Initial computation advice: Use Excel’s `PV` function as indicated by the note in red: "You must use the =PV function in your formula."#### Further Instructions2. **Compute the Present Value of Future Cash Flows** - Use Excel’s `PV` function to achieve this.3. **Deduct the Cost of the Investment** - Subtract the initial investment from the present value of the future cash flows to find the NPV.4. **Net Present Value** - Calculate using the above steps.#### Additional Topics3. **Compute the Project’s Internal Rate of Return** - Use Excel’s `RATE` function for this calculation.4. **Project’s Payback Period** - Calculate how long it takes for the investment to pay back its initial cost.5. **Project’s Simple Rate of Return** - Compute the profitability in percentage terms over the investment period.This table and instructions are part of a detailed financial analysis framework, crucial for evaluating investment opportunities using Excel’s financial functions.

Capital budgeting is a strategic financial planning process used by companies to evaluate and…

Answered: Laurman, Incorporated is considering…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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I need help with the attached empty fields

Laurman, Incorporated is considering a new project and has provided the details of the project. The Controller has asked you to compute various capital budgeting methods to help aid in the decision to pursue the investment.

Cell Reference: Allows you to refer to data from another cell in the worksheet. If you entered “=B5” into a blank cell, the formula would output the value from cell B5.
Basic Math Functions: Allow you to use the basic math symbols to perform mathematical functions. You can use the following keys: + (plus sign to add), - (minus sign to subtract), * (asterisk sign to multiply), and / (forward slash to divide). For example, if you entered “=B4+B5” in a blank cell, the formula would add the values from those cells and output the result.
SUM Function: Allows you to refer to multiple cells and adds all the values. You can add individual cell references or ranges. If you entered “=SUM(C4,C5,C6)” into a blank cell, the formula would output the result of adding those three separate cells. Similarly, if you entered “=SUM(C4:C6)”, the formula would output the same result of adding those cells.
RATE Function: Allows you to return the interest rate per period. The syntax of the RATE function is “=RATE(nper,pmt,pv,[fv],[type],[guess])” the result is the percentage interest rate value for the related inputs. The nper argument is the total number of payment periods. The pmt argument is the payment made each period that does not change over the life of the investment and this argument must be included if the [fv] argument is not included. The pv argument is the present value, or the total amount that series of future payments is worth now. The [fv] argument is the future value, or the cash basis to attain after the last payment is made and this argument must be included if the pmt argument is omitted. The [type] argument is a logical value of 0 or 1, which indicates when the payments are due where 1 is the payment at the beginning of the period and 0, is the payment at the end of the period. Both the [fv] and [type] values are optional arguments to have the formula work, which is why they are surrounded by brackets in the syntax, however, these values would not be entered with brackets in the actual function. The [guess] argument is also optional and is your guess for what the rate will be, however, if omitted the system assumes a guess of 10 percent. For this assignment, please include both the [pmt] and [fv] arguments, but leave out the [type] and [guess] arguments from the function. Also, the pv argument should be entered as negative value.
PV Function: Allows you to perform a present-value calculation.The syntax of the PV function is “=PV(rate,nper,pmt,[fv],[type])” and its output is the total amount that a series of future payments is worth now (also known as the present value). The rate argument is the interest rate per period. The nper argument is the total number of payment periods. The pmt argument is the payment made each period that does not change over the life of the investment, and this argument must be included if the [fv] argument is not included. The [fv] argument is the future value, or the cash basis to attain after the last payment is made; this argument must be included if the pmt argument is omitted. The [type] argument is a logical value of 0 or 1, which indicates when the payments are due, where 1 is the payment at the beginning of the period and 0 is the payment at the end of the period. Both the [fv] and [type] values are optional arguments to include, which is why they are surrounded by brackets in the syntax. However, these values would not be entered with brackets in the actual function

Certainly! Here's the transcription of the content in the image formatted for an educational website:

---

### Project Financial Analysis: Laurnam, Incorporated

Laurnam, Incorporated is considering the following project:

- **Required investment in equipment:** $2,205,000
- **Project life:** 7 years
- **Salvage value:** $225,000

#### Projected Net Operating Income (Annual)

- **Sales:** $2,750,000
- **Variable expenses:** $1,600,000
- **Contribution margin:** $1,150,000

**Fixed expenses:**
- **Salaries, rent and other fixed out-of-pocket costs:** $520,000
- **Depreciation:** $350,000

- **Total fixed expenses:** $870,000
- **Net operating income:** $280,000

- **Company discount rate:** 18%

#### Required Tasks

1. Compute the annual net cash inflow from the project.
2. Complete the table to compute the net present value of the investment.

---

**Instructions:**
Use the provided financial figures in cells A4 to C18, B24, and A30 to D46 to complete the calculations. Note that negative amounts or deductions should be entered as negative values and will display in parentheses.

**Current Calculation Result:**
- **Annual net cash inflow from the project:** $630,000

---

This information is intended to assist in the financial decision-making process by evaluating the potential profitability and viability of the project based on projected cash inflows and company policies.

### Net Present Value (NPV) Calculation Table

#### Instructions
1. **Complete the table to compute the net present value of the investment.**

#### Table Overview
The table comprises several financial elements necessary for calculating the net present value (NPV) of an investment.

- **Initial Investment**
- Now: $(2,205,000.00)

- **Annual Cost Savings**
- Year(s) 1 through 7: $630,000.00

- **Salvage Value of the New Machine**
- Year 7: $225,000.00

- **Total Cash Flows**
- Now: $(2,205,000.00)
- Year(s) 1 through 7: $630,000.00
- Year 7: $225,000.00

- **Discount Factor**
- Now: 1.0000
- Formula for Year(s) 1 through 7: `=1/(1+B18)^B5`
- Additional Notes: Ensure to use the discount rate from cell E18.

- **Present Value of the Cash Flows**
- Initial computation advice: Use Excel’s `PV` function as indicated by the note in red: "You must use the =PV function in your formula."

#### Further Instructions

2. **Compute the Present Value of Future Cash Flows**
- Use Excel’s `PV` function to achieve this.

3. **Deduct the Cost of the Investment**
- Subtract the initial investment from the present value of the future cash flows to find the NPV.

4. **Net Present Value**
- Calculate using the above steps.

#### Additional Topics

3. **Compute the Project’s Internal Rate of Return**
- Use Excel’s `RATE` function for this calculation.

4. **Project’s Payback Period**
- Calculate how long it takes for the investment to pay back its initial cost.

5. **Project’s Simple Rate of Return**
- Compute the profitability in percentage terms over the investment period.

This table and instructions are part of a detailed financial analysis framework, crucial for evaluating investment opportunities using Excel’s financial functions.

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