## Description

Complete Problems E8-12 and P8-23 in the textbook and present your responses in an Excel spreadsheet.

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## Explanation & Answer

Attached.

Name:

Date:

Class:

Professor:

ALL YELLOW HIGHLIGHTED CELLS REQUIRE DATA INPUT

DO NOT KEY OVER FORMULAS

E8-12

Use table in Exhibit 8B-1 in Appendix 8B

Amount of the Investment:

Less present value of Yr1 and Yr2 cash inflows:

Year 1:

Year 2:

Present Value of Year 3 Cash Inflow:

Therefore, the expected cash inflow for Year 3 is:

$

$

30,000.00

40,000.00

$

61,078.27

$

104,950.00

$

$

70,000.00

34,950.00

CELLS REQUIRE DATA INPUT

VER FORMULAS

ALL YELLOW HIGHLIGHTED CELLS REQUIRE DATA INPUT

FORMULAS

E8-23

Requirement 1.

Sales Revenues:

Variable Expenses:

Fixed Out-of-pocket operating costs:

Annual Net Cash inflows:

Investment required (A):

Annual Net Cash Inflow (B):

Payback Period (A / B):

$

$

$

$

Product A

250,000.00

(120,000.00)

(50,000.00)

420,000.00

$

$

$

Product A

170,000.00

60,000.00

2.83

$

$

$

$

Product B

350,000.00

(170,000.00)

(50,000.00)

570,000.00

$

$

$

Product B

380,000.00

130,000.00

2.92

Requirement 2.

Net Present Values:

Product A

Now

$ (170,000.00)

Purchase of Equipment:

Sales:

Variable Expenses:

Fixed out-of-pocket expenses:

Total Cash Flows (A):

Discount Factor (B):

Present Value (A x B):

Net Present Value:

Net Present Values:

Purchase of Equipment:

Sales:

Variable Expenses:

Fixed out-of-pocket expenses:

Total Cash Flows (A):

Discount Factor (B):

Present Value (A x B):

Net Present Value:

1

2

$ 250,000.00 $ 250,000.00

$ (120,000.00) $ (120,000.00)

$ (70,000.00) $ (70,000.00)

$ (170,000.00) $ 440,000.00 $ 440,000.00

1.000

0.862

0.743

$ (170,000.00) $ 379,280.00 $ 326,920.00

$ 26,440.00

Product B

Now

$ 380,000.00

1

2

$ 350,000.00 $ 350,000.00

$ (170,000.00) $ (170,000.00)

$ (50,000.00) $ (50,...