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Constructing a spreadsheet that accounts for depreciation

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(Objective: Constructing a spreadsheet that accounts for depreciation, amortization of loans, taxes and time value of money)

Construct a spreadsheet for the economic evaluation of the present worth of a project with the following characteristics:

The investment required is 20 million dollars. The positive cash flows start in the first year with 2 million, increasing by one million per year until being fixed at 8 million per year. The tax rate is 21% and the depreciation is MACRS-GDS for 5 years. The salvage value is negligible. The project capital requirements will be financed with a loan at 4% to finance 40% of the capital requirements. There are 8 yearly payments. The time value of money is 20%. Use a planning horizon of 20 years.

Reference no: EM133121717

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