capital budgeting calculations

I need help with these calculations. I will attach what I have done so far, but I am not sure I am calculating correctly. There are two tabs on my excel sheet. Thanks.Moore Manufacturing is currently operating at its full capacity of 15,000 units per year; however, even at full capacity, it is not able to keep up with demand for its products. Demand is estimated at 20,000 units per year, which is expected to continue for the next four years.In order to meet demand, Moore Manufacturing is considering purchasing new equipment costing $550,000. The equipment has an expected useful life of 4 years and has an expected salvage value of $50,000. Installation of the machine is estimated to cost $45,000 before it can be used for production.The company has made arrangements to lease a nearby warehouse for $12,000 per year over the next four years. The company will need to invest an additional $24,000 in renovations to the warehouse to make it suitable for the firm’s purposes. The lease agreement requires the company to restore the warehouse to its original condition at the end of the lease. The cost of this restoration is estimated to be $25,000.Current operating data is as follows: <> Per UnitSales price$175variable costsmanufacturing$60marketing$20$80fixed costsmanufacturing$25marketing/adm$15$40$120Operating Income before tax$55The purchase of the new equipment will have no effect on variable costs per unit. The current fixed costs are expected to remain the same. Current per-unit fixed costs include depreciation expenses of $5 for manufacturing and $4 for marketing and administration.If the equipment is purchased, fixed manufacturing costs (not including depreciation on the new equipment) of $125,000 will be incurred annually. The company would need to hire an additional marketing manager to serve new customers, at a cost of approximately $100,000. The firm is expected to be in the 40% tax bracket for the next four years. Moore Manufacturing requires a minimum after-tax return of 12 percent on investments and uses straight-line depreciation.Required:What is the initial investment outlay?What effect will the purchase of the new equipment have on operating profit after-tax for each of the four years?What effect will the purchase of the equipment have on after-tax cash inflows for each of the four years?Calculate the payback period for this investment.Calculate the book (accounting) rate of return for the investment, based on the average book value of the investment.Calculate the net present value NPV of the investment.Calculate the discounted payback period for the investment.Calculate the internal rate of return (IRR) for the investment.
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Cash flow from investments after taxes at 40%
EQUIPTMENT WITH DEPRECIATION SAVINGS
Income before tax
investment income
less taxes 40%
after tax cash flow
cash sav from depreciation 550000/4 at 40%
CASH FLOW FROM OPERATIONS NET TAXES
LEASE
Income before tax
investment income
less taxes 40%
after tax cash flow
275000
275000
110000
165000
55000
220000
275000
263000
105200
157800
equiptment
lease
550000
4 yrs
12000
4 yrs
NPV equiptment
-538440
salvage
instillation
50000
45000
restoration renovations
-25000
24000
$624.90
extra income
Year
0
1
2
3
4
-595000
220000
220000
220000
270000
-595000
196428.6
175382.7
156591.7
171589.9
$104,992.76017805
IRR equiptement
$104,992.76
NPV Rental
0
1
2
3
4
-24000
-24000
157800 140892.9
157800 125797.2
157800 112318.9
132800 84396.8
$439,405.77493753
$439,405.77
IRR Rental
intrest rate
275000 after tax and depreciation sav
20%
-657%
12%
220000

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