17.7 for homework 6

17.7 for homework 6 - Caluclation of cash flows (in...

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Unformatted text preview: Caluclation of cash flows (in Millions of Dollars Investment n Year Total dep. cost Working capital D 0 1993 (40.00) (4.00) 1 1994 2 1995 3 1996 4 1997 5 1998 6 1999 7 2000 4.00 Cost excl. Dep. 4.00 5.60 7.00 8.00 9.00 9.60 10.00 8.00 12.80 7.68 4.61 4.61 Numbers in black must be entered from problem description Numbers in blue are calculated by Excel Parameters needed for calculation MACRS factor for 5 yr 0.200 0.320 0.192 0.115 0.115 0.058 Tax rate t 0.37 To calculate IRR, c rate so that NPV be "Goal Seek" feature Annual cash flow, $MM 20.00 10.00 (10.00) (20.00) (30.00) (40.00) (50.00) 19 93 19 95 19 97 19 99 Annual cash (20.00) (30.00) (40.00) (50.00) 19 93 19 95 19 97 19 99 Year flows (in Millions of Dollars/year) S 10.00 14.00 17.50 20.00 22.50 24.00 25.00 Net Earning 3.78 5.29 1.58 (0.50) 3.67 6.17 6.55 Cash flow Cumulative Present value (44.00) (44.00) 3.78 (40.71) 5.29 (36.71) 9.58 (30.42) 12.30 (23.39) 11.35 (17.74) 10.78 (13.09) 15.15 (7.39) Net present value (NPV) IRR = 0.1018 or 10.18% problem description Interest rate 0.15 To calculate IRR, change the interest rate so that NPV becomes zero. Use "Goal Seek" feature in Excel. esent value ...
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