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Unformatted text preview: This excel spreadsheet contains the answers to the Lilian's Lanterns capital budgeting problem using the accounting format . On the exam, I recommend using the OCF formula format: OCF = (Sales-Costs)*(1-Tax Rate) + (Depreciation*Tax Rate). Note: You can analyze each depreciation component separately or net the amount of DIFFERENTIAL depreciation into a single calculation for the (Depreciation*Tax Rate) term of the equation. Lilians Lanterns Capital Budgeting Question Lilians Lanterns is an old American company that produces a wide range of lanterns. After extensive research and development over the last ten years totaling $5,000,000 Lilians Lanterns has developed a new technology for even longer lasting, energy efficient, indestructible LED lanterns. Before introducing these new LED lanterns to the consumer market, a limited market study was conducted with the target consumers at a...
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- Fall '11