week 4
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Week4HomeworkChapter25_Question301.xlsxEnter Answer
| Function: NPV; Formula: Add, Subtract; Cell Referencing | ||||||||||||
| Some cells are merged. | ||||||||||||
| Using Excel to Determine the Net Present Value | Student Work Area | |||||||||||
| PROBLEM | Required: Provide input into cells shaded in yellow in this template. Use the NPV function with cell referencing to the Problem area in the input cell. Use a math formula in the field in which the cash flow for the salvage value is expected to occur, and separately, to account for the initial cash flow in the formula after the function has been inputted. | |||||||||||
| Thunder Corporation, an amusement park, is considering a capital investment in a new exhibit. Amusement parks need to rotate exhibits to keep people interested. Additional information concerning the potential investment follows. | ||||||||||||
| Original cost of investment | $ 136,000 | |||||||||||
| Estimated sales value at end of 5 years | 60,000 | Calculate the net present value of this project to the company using Excel's NPV function. | ||||||||||
| Expected increase in annual cash flows | 25,000 | |||||||||||
| Estimated useful life in years | 5 | years | ||||||||||
| Borrowing rate | 8.0% | Net present value | ||||||||||
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Author: Answer Field 100% of your score. Function: NPV; Formula: Add; Subtract, Cell reference. Use the NPV function with cell referencing in each field to the respective amounts in the Problem area, with a mathematical formula in the field in which multiple cash flows are expected to occur. Use a mathematical formula with cell referencing to the Problem area to account for the cash flow at the acquisition date | Cost of capital | 10.0% | ||||||||||
