Laurman, Inc. is considering the following project:Required investment in equipment $2,205,000.00Project Life 7Salvage Value 225,000.00The project would provide net operting income each year as follows: Sales $2,750,000.00 Variable Expenses 1,600,000.00 Contribution Margin $1,150,000.00 Fixed Expenses Salaries, rent and other fixed out of pocket cots $520,000.00 Depreciation 350,000.00Total Fixed Expenses 870,000.00Net operating income $280,000.00Company discount rate 18%1. Compute the annual net cash inflow from the project $630,000.002. Complete the table to compute the net present value of the investment.Year(s)Now 1-7 7Initial Investment -$2,205,000.00Annual cost savings $630,000.00Salvage value of the new machine 225,000.00total cash flows -$2,205,000.00 $630,000.00 $225,000.00Discount factor 1.00 3.182 0.314Present value of the cash flows -$2,205,000.00 $2,401,262.38 $70,633.13Net Present Value $266,895.51Use Excel's PV function to compute the present value of the future cash flows Dedute the cost of the investment Net Present Value 3. Use Excel's RATE function to compute the project's internal rate of return 4. Compute the project's payback period 5. Compute the project's simple rate of return :2,eA,$
