Arizona State University
Fundamentals of Finance
Assignment # 8
Due: May 5th (Use the Digital Drop box)
This problem set will provide you practice with capital budgeting techniques. In
particular, this problem set will help you become familiar with functions in Excel that are
critical for capital budgeting.
Do problems 1
—
5 in Excel. Chapter 11 in the Excel workbook is a useful reference for
this assignment
(I posted this chapter on Blackboard).
1) Read 332340 —262 in the Excel book regarding the estimation of cash flows for
capital budgeting. After reading this section, recreate
Exhibit 112
for the “Supreme
Shoe Company”. Make sure to use formulas where appropriate. After recreating
Exhibit
112
, you should obtain the following aftertax, incremental cash flows (see timeline for
the Supreme Shoe Company,
Figure 112
, pg. 341):
Year
Cash Flows
0:
$62,680
1:
$24,248
2:
$24,248
3:
$24,248
4:
$24,248
5:
$42,248
2) Using the above cash flows above:
a. Calculate the NPV using a discount rate of 15% (see pg. 348 on use of NPV function).
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview.
Sign up
to
access the rest of the document.
 Spring '08
 Olander
 Finance, Net Present Value, Internal rate of return, Supreme Shoe Company

Click to edit the document details