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1. Understand how to use EXCEL Spre (a) Develop proforma Income Statement Using Excel Spreadsheet (b) Compute Net Project Cashflows, NPV, and IRR (c) Develop problem-solving and critical thinking skills and make long-term investment decisions $ 200,000 5% 8) Sales for first year (1) 1) Life Period of the Equipment- 4 years 2) New equipment cost 3)Equipment ship & install cost $(35,000) 10) Operating cost (60% of Sales) 4) Related start up cost 5) Inventory increase 6) Accounts Payable increase 7) Equip. salvage value before tax 15,000 13) Cost of Capital (Discount Rate) $(200,000) 9) Sales increase per year S (120.000) -60% $ (5,000) (as a percent of sales in Year 1) s 25,000 11) Depreciation (Straight Line)YR S (60,000) $ 5,000 12) Marginal Corporate Tax Rate (T 21% 10% ESTIMATING initial Outlay iCash Flow. CFO, T= CFO CF1CF2 CF3 CF4 Year 1) Equipment cost 2) Shipping and Install cost 3) Start up expenses Total Basis Cost (1+2+3) 4) Net Working Capital Total Initial Outlay Revenue Operating Cost Depreciabion EBIT Taxes Net Income Add back Depreciaton Total Operating Cash Flow Terminal: 1) Change in net WC 2) Salvage value (after tax) $ 20.000 savaoe Value Before Tax (1-T Total Pro ectNet Cash Flows NPV- Paybacks Qu1 Would you accept the project based on NPV, IRR

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