50.1K

Verified Solution

Link Copied!

Scorch (Alto) 202 Excel Project 3 - Instructions & Template - Excel AutoSave Review View Data Formulas Help Draw File Home Insert Page Layout E68 C B D G H 4 5 Project 1: 6 A gym equipment manufacturer has an opportunity to begin making a new type of treadmill which has additional 7 features from the models they currently make. To manufacture the required parts for the new models, the a company will need new machinery. 9 10 Because of the risk level involved in taking on a new product, management is trying to determine whether the 11 returns will justify the risk. Members of management are evaluating the project and have determined a 13% 12 discount rate is appropriate for evaluation purposes. To aid management in their decision-making process, your 13 supervisor has asked you to prepare an analysis of the project giving the following information and assumptions: 1) The new equipment will have a cost of $345,000, a salvage value of $15,000 and a 6-year useful life. Straight line depreciation will 2) The projected revenues, costs, and results for each of the 6 years of this project are as follows: 14 15 16 17 18 19 20 21 Sales $352,000 22 Less: 23 Manufacturing costs $207,000 24 Depreciation 55,000 25 Shipping costs 14,000 26 Administrative costs 15,200 291,200 27 Income before income taxes 60,800 28 Income tax expense 24320 29 Net income $36,480 30 31 Instructions: 32 Using the template below, 33 a) compute the annual rate of return 34 b) compute the payback period. compute the NPV using the determined 13% discount rate 36 Is this proposal acceptable using this discount rate? d) compute the NPV using a 16% discount rate so that Management has a comparison for analysis 38 is this proposal acceptable using this discount rate? 40 41 In order to get full points for this project Template Type here to search Search (Alto) 202. Excel Project 3 - Instructions & Template - Excel ve On 2 8 Data Review Formulas View Home Insert Help Draw Page Layout X F G H 1 D C B c) Compute the NPV using the discount rate of 13% and the PV Excel formula. You should list out your inputs in the provided spaces. Present value of cash inflows: !! Present value of cash outflows: Net present value is this proposal acceptable using this discount rate? Respond Yes or No. d) Compute the NPV using the discount rate of 16% and the PV Excel formula where required. You should list out your inputs in the provided spaces. Present value of cash inflows: Insert Draw Page Layout Home Formulas Data Review View Help X fo H D Net present value Is this proposal acceptable using this discount rate? Respond Yes or No. d) Compute the NPV using the discount rate of 16% and the PV Excel formula where required. You should list out your inputs in the provided spaces. Present value of cash inflows: 1 Present value of cash outflows: Net present value 0 31 2 23 04 05 06 107 10B 109 110 111 112 113 114 115 116 117 118 119 120 121 122 Is this proposal acceptable using this discount rate? Respond Yes or No Template Type here to search o O

Answer & Explanation Solved by verified expert

See Answer