FIN 571 NERD Education Specialist /fin571nerd.com FIN 571 NERD Education Specialist /fin571nerd.com | Page 21

produce 2,400 soufflés per year, with each costing $2.80 to
make and priced at $5.65. Assume that the discount rate is 16
percent and the tax rate is 35 percent. What is the NPV of the
project? Should the company make the purchase? 44. A project
costing $6,200 initially should produce cash inflows of $2,860 a
year for three years. After the three years, the project will be
shut down and will be sold at the end of Year 4 for an estimated
net cash amount of $3,300. What is the net present value of this
project if the required rate of return is 11.3 percent? 45. Down
Under Boomerang, Inc., is considering a new three-year
expansion project that requires an initial fixed asset investment
of $2.73 million. The fixed asset will be depreciated straight-
line to zero over its three-year tax life, after which it will be
worthless. The project is estimated to generate $2,090,000 in
annual sales, with costs of $785,000. The tax rate is 30 percent
and the required return is 13 percent. What is the project’s
NPV?
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FIN 571 Week 1 Connect Problems (Math and Accounting
Review)
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FIN 571 Week 1 Connect Problems (Math & Accounting Review) 1.
Functions Excel will make your life as a finance student much easier.
This section will show how to use various functions in Excel. Once
you understand the how and why of a particular financial equation,
you can make 1. Which Excel cell entry will calculate the square root
of 165? 2. Which statements about Excel’s FV function are correct? 3.
Which fields are required to calculate net present value (NPV) in
Excel? 4. Which Excel function is used to calculate the amount of
each annuity payment? 5. Which fields are required to calculate the
rate of return (RATE) for a present value calculation in Excel? 2. The
Balance Sheet This lesson will help you refresh your knowledge on
the basics of the balance sheet. Brushing up on these concepts now
will help you tackle your finance coursework later. General Ledger