course material

1. excel spreadsheet 22
Just need the spreadsheet done from this infoScenario and Assignment DetailsElon Motors
produces electric automobiles. In recent years, they have been making all components of
the cars, excluding the batteries for each vehicle. The company’s leadership team has been
considering the ways to reduce the cost of producing its cars. They have considered various
options, and believe that they could reduce the cost of each car if they produce the car
batteries instead of purchasing them from their current vendor, Avari Battery
Company.Currently, the cost of each battery is $300 per unit. The company feels that they
could greatly reduce the cost if the production team makes each battery. However, to
produce these batteries, the company will need to purchase specialized equipment that
costs $1,670,000. However, this equipment will have a useful life of 10 years, and is
expected to have a salvage value of $99,700 at the end of that time.Currently, the company
purchases 2,500 batteries per year, and the company expects that the production will
remain the same for the coming 10-year period. To make the batteries, the company expects
that they will need to purchase direct materials at a cost of $100 per battery produced. In
addition, the company will need to employ two production workers to make the batteries.
The workers likely work 2,080 hours per year and make $25 per hour. In addition, health
benefits will amount to 20% of the workers’ annual wages. In addition, variable
manufacturing overhead costs are estimated to be $20 per unit.Because there is currently
unused space in the factory, no additional fixed costs would be incurred if this proposal is
accepted. The company’s cost of capital (hurdle rate) has been determined to be 12% for all
new projects, and the current tax rate of 21% is anticipated to remain unchanged. The
pricing for the company’s products as well as number of units sold will not be affected by
this decision. The straight-line depreciation method would be used if the new equipment is
purchased.Required ItemsBased on the above information and using the provided Excel
Template (Links to an external site.), calculate the following items for this proposed
equipment purchase.Annual cash flows over the expected life of the equipmentPayback
periodAccounting rate of returnNet present valueInternal rate of returnModified Internal
rate of returnDo you recommend the acceptance of this proposal? Why or why not?Prepare
a two-page minimum, double-spaced Word paper elaborating on and supporting your
answer. Be sure to follow APA formatting, as applicable.Grading Criteria and SubmissionThe
following list, with its five sections and mechanics, shows the Course Project grading
criteria. Each section, including mechanics, is worth a total of 20 points each. The entire
Course Project is worth 120 points total.Section 1: Calculation of the annual cash flows over

2. the life of the equipmentSection 2: Calculation of the payback period and accounting rate of
returnSection 3: Calculation of the net present valueSection 4: Calculation of the IRR and
modified IRR (MIRR)Section 5: The written proposalMechanic: Use Excel formulas
throughout the worksheet to determine results. In addition, the Excel template is properly
formatted and presented without unnecessary notations.