# Ch 13 Student Form by 5i32VE

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Chapter 13: Applying Excel                                                                   YOUR NAME HERE
can work either of the 2
Data                                                                                         solutions listed below.
Example C
Cost of equipment needed                                                           \$60,000
Working capital needed                                                            \$100,000
Overhaul of equipment in                                              4 years       \$5,000
Salvage value of the equipment in                                     5 years      \$10,000
Annual revenues and costs:
Sales revenues                                                                   \$200,000
Cost of goods sold                                                               \$125,000
Out-of-pocket operating costs                                                     \$35,000
Discount rate                                                                         14%

Enter a formula into each of the cells marked with a ? below
Exhibit 13-4

Sales revenues                                                                          ?
Less cost of goods sold                                                                 ?
Less out-of-pocket costs                                                                ?
Annual net cash inflows                                                                 ?

Amount of        ?      Present Value
Year(s)       Cash Flow     Factor*   of Cash Flows
Purchase of equipment                                                 Now                ?     1.000                ?
Working capital needed                                                Now                ?     1.000                ?
Overhaul of equipment                                                 ?                  ?       ?                  ?
Annual net cash inflows from sales of the product line             1- ?                  ?       ?                  ?
Salvage value of equipment                                            ?                  ?       ?                  ?
Working capital released                                              ?                  ?       ?                  ?
Net present value                                                                                                   ?

*Use the formulas from Appendix 13B:
Present value of \$1 = 1/(1+r)^n
Present value of an annuity of \$1 = (1/r)*(1-(1/(1+r)^n))
where n is the number of years and r is the discount rate

Alternate solution, using Excel =NPV, =IRR functions:                           Amount of
Year(s)       Cash Flow
0                ?
1                ?
2                ?
3                ?
4                ?
5                ?
6                ?
7                ?
8                ?
9                ?
10                ?
PV of FCF                ?
Investment               ?
Net PV                   ?

IRR                      ?
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