Part One
Complete the calculations for analyzing the proposed equipment purchase in the provided excel template. Use Excel formulas within the cells to calculate all required calculated numbers.
Prepare a PowerPoint presentation to present to management addressing the following:
Explain the importance or significance of the calculations prepared in Part 1 of this assignment. Do not explain how the numbers were calculated, this is what your formulas in Excel will show.
Recommend whether the equipment should be purchased based solely on the calculations in Part 1.
Capital Budgeting Decision
To reduce production costs, the production department is exploring the purchase of a new
piece of equipment that will cost $1,500,000, at an expected discount rate of 8%. The
equipment is expected to return net cash inflows of $250,000 over the next 10 years.
Based on the above information and using Excel, calculate the following items for this
proposed equipment purchase:
1. Net Present Value
2. Internal Rate of Return
3. Payback Period
Would you recommend investment in this equipment? Why or why not?
the purchase of a new
unt rate of 8%. The
he next 10 years.
wing items for this
not?
Capital Budgeting Calculations
Net Cash Flows
(Reference Parameters!)
Term
0
1
2
3
4
5
6
7
8
9
10
Cumulative Cash Flow
(Use Formulas!)
lculations
Parameters
Initial Investment
Annual Net Cash Flows
Duration in Years
Discount Rate
Use Excel Formulas!
IRR
NPV
Payback Period
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Formatting
Title Page
Citation
Outline
