Introduction to Corporate Finance

Ross et al.: Fundamentals

of Corporate Finance, Sixth

Edition, Alternate Edition

IV. Capital Budgeting 10. Making Capital

Investment Decisions

© The McGraw−Hill^377

Companies, 2002

b.Solve Problem 19 again with the price still at $11 but find the quantity of car-

tons per year that you can supply and still break even. Hint: It’s less than

170,000.

c. Repeat (b) with a price of $11 and a quantity of 170,000 cartons per year, and

find the highest level of fixed costs you could afford and still break even.

Hint: It’s more than $160,000.

Spreadsheet Templates10–6, 10–7, 10–10, 10–14, 10–18, 10–21, 10–25

348 PART FOUR Capital Budgeting

A B C D

E F G H

321

654

987

112110

1143

Using a spreadsheet for time value of m

If we invest $ (^25) ,0 00 at 1 2 percent, how longon uenytil w calculations
e have $ 50 , (^000)? We need to solve
for the unknown of periods, so we u
RaFtePuretu (rarese Vnte)at Vluaelu (fve) (pv) se the formal NPER (rate, pmt, pvfv)
ThPeeriods:
formal entered in cell B 10 is = NPER: no
has a negative sign on it. Also notice that rate istic ee tnhteat pred amt iss de zecimroa al, nnd toht aat pv
percentage.
$$ 5200 ,0.1^5 ,0 02000
6 .1 16255
Challenge
(continued)