Basic Capital Budgeting Techniques; Uneven Net Cash Inflows with Taxes; SpreadsheetApplication Use the same information for this problem as you did for Problem 12-47, except thatthe discount rate is 10% (not 12%), the investment is subject to taxes, and the projected pretax operating cash inflows are as follows:[LO 12-4, 12-6]Year Pretax Cash Inflow Year Pretax Cash Inflow1 $ 65,000 6 $300,0002 80,000 7 270,0003 120,000 8 240,0004 200,000 9 120,0005 240,000 10 80,000Jensen has been paying 25% for combined federal, state, and local income taxes, a rate that is notexpected to change during the period of this investment. The firm uses straight-line depreciation.Assume, for simplicity, that MACRS depreciation rules do not apply.Required Using Excel, compute the following for the proposed investment:1. The payback period (in years), under the assumption that the cash inflows occur evenly throughout theyear. Round your answer to 1 decimal place. 2. The accounting (book) rate of return based on (a) initial investment, and (b) average investment. Roundboth answers to 1 decimal place (e.g., 13.417% = 13.4%). 3. The net present value (NPV), rounded to the nearest whole dollar.4. The present value payback period of the proposed investment under the assumption that the cash inflowsoccur evenly throughout the year. (Note: Use the formula at the bottom of Appendix C, Table 1 to calculate present value factors.) 5. The internal rate of return (IRR), rounded to 1 decimal place (e.g., 5.491% = 5.5%).6. The modified internal rate of return (MIRR), rounded to 1 decimal place. (In conjunction with thisrequirement, you might want to consult either of the following two references: https://support.office.com/en-us/Search/results?query=mirr+function&src=as and/or http://www.journalofaccountancy.com/issues/2017/feb/calculate-internal-rate-of-return-in-excel.html.)
Basic Capital Budgeting Techniques; Uneven Net Cash Inflows with Taxes; Spreadsheet
Application Use the same information for this problem as you did for Problem 12-47, except that
the discount rate is 10% (not 12%), the investment is subject to taxes, and the projected pretax operating cash inflows are as follows:
[LO 12-4, 12-6]
Year Pretax
1 $ 65,000 6 $300,000
2 80,000 7 270,000
3 120,000 8 240,000
4 200,000 9 120,000
5 240,000 10 80,000
Jensen has been paying 25% for combined federal, state, and local income taxes, a rate that is not
expected to change during the period of this investment. The firm uses straight-line
Assume, for simplicity, that MACRS depreciation rules do not apply.
Required Using Excel, compute the following for the proposed investment:
1. The payback period (in years), under the assumption that the cash inflows occur evenly throughout the
year. Round your answer to 1 decimal place.
2. The accounting (book)
both answers to 1 decimal place (e.g., 13.417% = 13.4%).
3. The
4. The present value payback period of the proposed investment under the assumption that the cash inflows
occur evenly throughout the year. (Note: Use the formula at the bottom of Appendix C, Table 1 to calculate present value factors.)
5. The
6. The modified internal rate of return (MIRR), rounded to 1 decimal place. (In conjunction with this
requirement, you might want to consult either of the following two references: https://support.office.com/
en-us/Search/results?query=mirr+function&src=as and/or http://www.journalofaccountancy
.com/issues/2017/feb/calculate-internal-rate-of-return-in-excel.html.)
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