ABI-WE 4: Michigan Movies, Inc. TOPIC: Capital Budgeting (CH 13) This is a fictitious organization, but for more information about this industry, go to Source data: Cost of new equipment 1,500,000 Salvage value of new equipment 150,000 Estimated life in years of new equipment 5 22,650 Expected annual cash flow resulting from the investment in new equipment 500,000 Company's minimum required rate of return (as a percent) 0.12 Required: 1 Open a solution worksheet (name it "yourlastname Solution") and organize the cash flow data for Michigan Movies. 2 Using the data in the table, compute the following to assist in your analysis of the decision whether or not to buy the new equipment: 3 Find the minimum required rate of return if the project merely broke even (NPV = 0). 4 5 Excel Functions that you will learn by solving this business issue: 4 Create a table (Insert-Tables-Table) and use it to sort the data 7 Data validation (Data-Data Tools-Data Validation) 19 Conditional formatting (Home-Styles-Conditional Formatting (use a new rule) 20 Goal Seek (Data-Data Tools-What-If Analysis-Goal Seek) 31 Net Present Value (Formulas-Function Library-Financial-NPV) 32 Internal Rate of Return (Formulas-Function Library-Financial-IRR) 39 Password protect the document (Review-Changes-Protect Workbook-Protect Structure-Password) Continue to use these functions from prior ABI-WE assignments: #1, #8-12, #14, #21, #36-38 The owners of a mid-sized not-for-profit arts organization that supports Michigan's emerging movie industry are considering investment in a state-of-the-art piece of equipment that produces computer generated images. As the cost accountant for the organization, you are preparing an analysis of
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