Project #93046 - Finance homework

Mazur Building is analyzing the proposed purchase of a new machine for $95,000. The proposed machine has an estimated economic life of four years but will be treated as three‑year MACRS property for depreciation purposes. The machine will increase the firm's capacity, and it is expected to contribute $43,000 annually to earnings before depreciation, interest and taxes. The firm is in a 25% tax bracket and estimates its cost of capital to be 15%. Calculate the NPV of this investment using an Excel spreadsheet. Show and label your work. Formulas for NPV and IRR are preprogrammed in Excel. 

 

            DO NOT hard enter calculated numbers.  The numbers above should be hard entered somewhere on your spreadsheet as given variables.  The spreadsheet itself should be comprised of formulas, so that you can change a variable (such as asset cost, tax rate or discount rate) and the spreadsheet will automatically recalculate NPV and IRR.

 

            DO NOT submit someone else’s work.  Although you may confer on this project, it is ABSOLUTELY IMPERATIVE that each student submits their own spreadsheet.  One work product submitted by multiple students will receive a grade of 0.

 

            Make this a clean, professional, properly labeled, one-page report suitable for submission to your supervisor.  I will be available via our D2L site for questions.  I might suggest that you view our Discussion Board to see what questions other students have asked. Completed projects should be submitted via our Dropbox in D2L.  (20 POINTS). 

 

            For an extra 5 points, calculate the IRR.

Subject Business
Due By (Pacific Time) 11/14/2015 10:00 pm
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