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Master Budget

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1 2 3 4 5 6 7 8 $50,000 50,000 60,000 40,000 65,000 50,000 70,000 65,000 $32,500 $32,500 $32,500 $32,500 $32,500 $32,500 $32,500 $32,500 Depreciation Cash Fows ($320,000) $17,500 $17,500 $27,500 $7,500 $32,500 $17,500 $37,500 $32,500 $32,500 $32,500 $32,500 $32,500 $32,500 $32,500 $32,500 $32,500 Add back Depreciation $50,000 $50,000 $60,000 $40,000 $65,000 $50,000 $70,000 $65,000 Net Cash Flows PVF10% 1 0.9091 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132 0.4665 ($320,000.00) $45,455 $41,322 $45,079 $27,321 $40,360 $28,224 $35,921 $30,323 NPV ($25,996.08) IRR @10% -2% Year Year 0 1 $50,000 $32,500 Depreciation Cash Fows ($320,000) $17,500 $32,500 Add back Depreciation $50,000 Add back Depreciation PVF11% 1 0.9434 ($320,000.00) $47,170 NPV $24,886.15 IRR 2% Year Year 0 2 50,000 $32,500 $17,500 $32,500 $50,000 0.8900 $44,500 3 60,000 $32,500 $27,500 $32,500 $60,000 0.8396 $50,377 4 40,000 $32,500 $7,500 $32,500 $40,000 0.7921 $31,684 5 65,000 $32,500 $32,500 $32,500 $65,000 0.7473 $48,572 6 50,000 $32,500 $17,500 $32,500 $50,000 0.7050 $35,248 7 70,000 $32,500 $37,500 $32,500 $70,000 0.6651 $46,554 8 65,000 $32,500 $32,500 $32,500 $65,000 0.6274 $40,782 Based on the calculated NPV and IRR, the projcet is not a good investmmet option. It has a negative NPV of -$$25,996.08 and a negative IRR of -2%. However the project would be viable if ithe rate of return is raised to 11% Cost of Equipment Salvage Value Depeciation Base Life of Investment Annual Depreciation 320,000. ...
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