# AEC 31 ACD Gerodiaz Exer05.docx - EXCEL EXERCISE#5...

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EXCEL EXERCISE #5: Cost-Benefit Analysis 1. This example is taken from the book of Fundamentals of Financial Management by Dr. Eugene Brigham– Page 454 problem. 21stCentury is considering another project; Project Y. Project Y has an up front cost of \$200,000 and an economic life of three years. If the companydevelops the project, its after-tax operating costs will be \$100,000 a year;however, the project is expected to produce after-tax cash inflows of \$180,000 ayear. Thus, the project’s estimated cash flows are as follows: ABCDEF1Cost-Benefit Analysis: Plan Y 2TotalDiscountPresent3YearCostsBenefitsBenefitsFactorValue40 \$200,000.00 \$0.00 51 \$200,000.00 \$180,000.00 62 \$200,000.00 \$180,000.00 73 \$200,000.00 \$180,000.00 8 9 NPV =10Discount11Rate =2.Highlight the cell range B4:D7. Open the FORMAT menu, select CELLS. Select the category CURRENCY select the format \$1,234.10. Repeat this procedure for the cell range F4:F9. 3.Highlight cell B10. Open the FORMAT menu, select CELLS. Select the category PERCENT, select two decimal places.