| Project A: Major Equipment Purchase |
| | Year |
| | No Equipment | New Equipment Installed (Future Project) |
| | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Annual Gross Sales |
| Cost of sales - 60% Annual Sales [Yr 0]; 5% decrease per year |
| MACRS 7-year schedule (Depreciation) |
| Depreciation with Salvage Value |
| Earnings before taxes |
| Marginal corporate tax rate 25% |
| Net Income (After Taxes) | | | | | | | | | | | Required rate of return | | 8% |
| | | | | | | | | | | | NPV | | $0 |
| Add Depreciation |
| Operating Cash Flows (Future Cashflows) | | | | | | | | | | | IRR | | ERROR:#NUM! |
| Initial Investment | | | | | | | | | | | PI | | Don't use PI. |
| Net Cash Flows |
| Cumulative Cash Flows | | | | | | | | | | | Payback Period | | ERROR:#DIV/0! |
| Major Equipment Purchase | -$10,000,000 |
| Salvage value at the end of year 8 | $500,000 |
| Required rate of return | 8% |
| Marginal corporate tax rate | 25% |
betheman87
CapitalBudgeting_1.xlsx
