# IP-1 - PROBLEM 2-5 Given Initial Investment in software...

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PROBLEM 2-5 Given Solu Initial Investment in software \$(55,000) = Value given i Technician training cost \$(10,000) = Formula/Calc Hourly Rate 25 = Qualitative an Tax Rate 30% = Goal Seek or Discount Rate 9% = Crystal Ball I \$15,000 = Crystal Ball O 25% Total hours of installation per year 6,000 Solution Year Year 0 1 2 3 Rev \$37,500 \$37,500 \$37,500 Upgrade Expense (15,000) (15,000) (15,000) EBIT \$22,500 \$22,500 \$22,500 Less: Taxes (6,750) (6,750) (6,750) NOPAT \$15,750 \$15,750 \$15,750 Plus: DEP - - - Less: CAPEX (65,000) - - - Project Free Cash Flows (PFCF) \$(65,000) \$15,750 \$15,750 \$15,750 NPV \$(3,738) IRR 7% Payback Period 4.13 Additional Investment per year for software upgrades % Reduction in hours of technician time for installation

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lution Legend in problem lculation/Analysis required nalysis or Short answer required r Solver cell Input Output 4 5 \$37,500 \$37,500 (15,000) (15,000) \$22,500 \$22,500 (6,750) (6,750) \$15,750 \$15,750 - - - - \$15,750 \$15,750
PROBLEM 2-6 Given Investment (CAPEX in year 0)

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## This note was uploaded on 07/24/2009 for the course FIN FIN taught by Professor Robbani during the Summer '09 term at University of Maryland Baltimore.

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IP-1 - PROBLEM 2-5 Given Initial Investment in software...

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