Grader - Instructions Excel 2013 Project

Berk_DeMarzo_Harford. Problem 9-17. V8

Project Description:
(V8) In this problem, you will analyze the economics of replacing an old machine with a new one.

Steps to Perform:

Points
Step Instructions
Possible

1 Complete the steps below using cell references to given data or previous calculations. 1
In some cases, a simple cell reference is all you need. To copy/paste a formula across a
row or down a column, an absolute cell reference or a mixed cell reference may be
preferred. If a specific Excel function is to be used, the directions will specify the use of
that function. Do not type in numerical data into a cell or function. Instead, make a
reference to the cell in which the data is found. Make your computations only in the
blue cells highlighted below. In all cases, unless otherwise directed, use the earliest
appearance of the data in your formulas, usually the Given Data section.

Start Excel. Download and open the workbook named:

Berk_DeMarzo_Harford_Problem_9-17_Start.

In cell D19, by using cell references, calculate the book value of the old machine.

2 In cell D20, by using cell references, calculate the capital loss after the sale of the old 1
machine.

Note: The output of the expression you typed in this cell is expected as a negative number.

3 In cell D21, by using cell references, calculate the tax savings from the old machine. 1

Note: The output of the expression you typed in this cell is expected as a positive number.

4 In cell D22, by using cell references, calculate the proceeds from the sale of the old machine. 1

5 In cell D24, by using cell references, calculate the EBITDA increase from the new machine. 1

Note: EBITDA increase is the increase in Gross Margin. The output of the expression you
typed in this cell is expected as a positive number.

6 In cell D25, by using cell references, calculate the depreciation expense from the new 1
machine.

Note: The output of the expression you typed in this cell is expected as a positive number.

7 In cell D26, by using cell references, calculate the depreciation increase from the new 1
machine.

Note: Depreciation increase is the difference between the depreciation of the old and new
machines. The output of the expression you typed in this cell is expected as a positive
number.

8 In cell D27, by using cell references, calculate the free cash flow increase from the new 1
machine.

Created On: 03/01/2019 1 Berk_DeMarzo_Harford. Problem 9-17. V8

Grader - Instructions Excel 2013 Project

Points
Step Instructions
Possible

9 In cell D28, by using cell references, calculate the free cash flow in year 0 from the new 1
machine.

Note: The output of the expression you typed in this cell is expected as a negative number.

10 In cell D29, by using the PV function and cell references, calculate the NPV of the 1
replacement.

Note:
(1) Calculate the NPV as the sum of the Present Value of the FCF increase for years 1-10 plus
the FCF in year 0.
(2) In the PV function, omit the [fv] and [type] arguments.

11 In cell D30, type either Yes or No depending on whether you would take this investment 1
opportunity.

12 Save the workbook. Close the workbook and then exit Excel. Submit the workbook as 0
directed.

Total Points 11

Created On: 03/01/2019 2 Berk_DeMarzo_Harford. Problem 9-17. V8