Académique Documents
Professionnel Documents
Culture Documents
La'Kita Micy
Clark Paint
Data:
$200,000
5
$40,000
5,500,000
1,100,000
0
3
2,000
$12.00
$2,500
18%
$0.25
$0.05
$0.45
12%
35%
Make
Cost to produce
Annual cost of direct material:
Need of 1,000,000 cans per year
Annual cost of direct labor for new employees:
Wages
Health benefits
Purchase
$200,000
58,650
4,500
Other benefits
Total wages and benefits
Other variable production costs
Total annual production costs
Annual cost to purchase cans
10,557
73,707
100,000
$373,707
$500,000
Before Tax
Amount
Tax
Effect
$72,540
32,000
After Tax
Amount
0.65
$47,151
0.35
$11,200
$58,351
3.43 years
$126,293
32,000
94,293
33,003
$61,290
$61,290/$200,000 =
30.65%
Before Tax
Amount
Year
0
Tax %
-$200,000
Cost of training
Annual cash savings
Tax savings due to depreciation
Disposal value
Net Present Value
0
1-5
1-5
5
0
$126,293
$32,000
$40,000
0.65
0.35
This function REQUIRES that you have only one cash flow per period (period 0 through p
This means that no annuity figures can be used. The chart for our example can be revised a
Item
Cost of machine and training
Year 1 inflow
Year 2 inflow
Year 3 inflow
Year 4 inflow
Year 5 inflow
Year
After Tax
Amount
0 $ (200,000)
1 $ 93,290
2 $ 93,290
3 $ 93,290
4 $ 93,290
5 $ 133,290
The IRR function will require the range of cash flows beginning with the initial cash outflo
and progressing through each year of the project. You also have to include an initial "guess
possible IRR. The formula is: =IRR(values,guess)
IRR Function
IRR(f84..f89,.30)
39.2%
After tax
10% PV Present
Amount
Factor Value
-$200,000
1.000 -$200,000
0
82,090
11,200
40,000
1.000
3.791
3.791
0.621
0
311,205
42,459
24,840
$178,504