n Need help calculating TNOCF and NPV please Example 1: Because capital budgeting...
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Need help calculating TNOCF and NPV please
Example 1: Because capital budgeting requires numerous repetitive cash flows, it is an ideal application for Excel. When doing a capital budgeting problem, as in most Excel uses, you should do few or no calculations on your own, but rather let Excel do the calculations for you. We will begin with the shark attractant project. We have the following projections for the project: 4.00 20% Cans sold per year: 50,000 Price per can: Variable cost per can: 2.50 Required return: Fixed costs per year: 12,000 Manufacturing equipment: 90,000 Project life (years): Initial networking capital: 20,000 Tax rate: Sales Price $40,000 Book Value at Year 3 With these numbers, we can prepare the pro forma income statement. Use straight-line depreciation. 34% Sales $ 200,000 Variable costs 125,000 Fixed costs 12,000 Depreciation 30,000 ERIT 33,000 Taxes (34%) 11,220 Net Income 21.780 Example 2 Calculate the initial Cost, Operating Cash Flow, Terminal Non-operating Cash Flow, and NPV Initial Cost: 137,000 Equipment - NWC OCF: 51.780 (S-VC-FC)*(1-1) + Dt TNOCF: SP-15P-BVI*t + NWC NPV
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