Spreadsheet Models for Managers
Problem Set 8
Financial Models
Be sure to check the list of worksheet functions that are needed for the homework assignments, to see which new functions (if any) might help with this one.
For a quick way to copy homework problem data into your homework solution, see "Avoid retyping homework problem data."
Since macros are not permitted in this homework assignment, be certain that your workbook has no macros.
Remember that some problems are slight extensions of what we show you in demonstrations and the session notes, and some problems are somewhat ambiguous. This is intended to parallel what you'll frequently encounter at work. If you feel a bit confused, there are some things you can do to help clarify things.
Numbers at the left in square brackets indicate point values.
In this problem you can use, if you like, the macro Convolve.
8.1 [60] 
You're in
charge of capital planning for personal computer acquisitions for Eggplant Technologies, Inc., the leading supplier of
hardware for intensive cultivation of eggplants. You're producing the plan for purchases over the next three years.
Computers for Sales Representatives and Engineers have different prices, as shown in the table below.
 |
Cost (k$) |
| Sales Representatives |
1.5 |
| Engineer |
4.7 |
The hiring stream you're supporting is as shown below.
|
Y1Q1 |
Y1Q2 |
Y1Q3 |
Y1Q4 |
Y2Q1 |
Y2Q2 |
Y2Q3 |
Y2Q4 |
Y3Q1 |
Y3Q2 |
Y3Q3 |
Y3Q4 |
| Sales Rep |
2 | 3 | 4 | 4 | 2 | 2 | 3 | 5 | 2 | 4 | 2 | 1 |
| Engineer |
0 | 0 | 1 | 1 | 2 | 0 | 1 | 1 | 2 | 0 | 2 | 1 |
ETI depreciates this equipment uniformly over a period of three years after the equipment is acquired, and pays for all
computer purchases in cash. You've been asked to deliver figures that show both cumulatively and for each quarter in the
next three years:
- How much cash these purchases will require
- How these purchases will affect corporate assets
- How much additional depreciation expense these acquisitions will generate
Show all results in units of 1000s of dollars.
(a) [10]
Create a range on your worksheet that holds the data for the hire stream analysis. Directly below that, create a range
for the equipment cost analysis. Name these arrays HireStreamAnalysis and EqptCostAnalysis,
respectively. AnswerA should be a compound range consisting of a 2x1 range and a 2x12 range.
(b) [20]
Compute the total cumulative cash required, in thousands, in each quarter to support the hiring streams.
(c) [15]
Compute the total cumulative depreciation expense, in thousands, in each quarter.
(d) [15]
Compute the cumulative net increase in assets, in thousands, in each quarter resulting from these purchases, after accounting
for depreciation.
8.2 [40]
This problem deals with the same situation as Problem 8.1, with the following changes. For every
eighth Sales Rep you add, you must purchase one printer valued at $1.1K,
and for every sixth additional engineer, you must purchase one additional file server valued at
$5.1k.
(a) [10]
Create ranges on your worksheet that hold the equipment cost analysis and equipment stream analysis. The equipment cost
analysis should be a 4x1 range that holds the cost of each these 4 kinds of equipment. The equipment stream analysis should
be a 4x12 range that contains the numbers of each type of equipment that must be purchased in each quarter. The four kinds
of equipment are Sales Rep PC, Engineer PC, Printer, and File Server.
(b) [10]
Compute the total cumulative cash required in each quarter to support the hiring streams.
(c) [10]
Compute the cumulative depreciation expense in each quarter.
(d) [10]
Compute the cumulative net increase in assets in each quarter resulting from these purchases, after accounting
for depreciation.
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