2. The company is considering a project involving the purchase of new equipment. Change the data area of your worksheet to match the following: Use Exhibit 7B-1 and Exhibit 7B-2. (Use appropriate factor(s) from the tables provided.) C A 1 Chapter 7: Applying Excel 2 3 Data Example E 4 220,000 Cost of equipment needed Working capital needed 6 35,000 Overhaul of equipment in four years 20,000 8 Salvage value of the equipment in five years 40,000 9Annual revenues and costs: $ 10 Sales revenues 375,000 11 Cost of goods sold 255,000 $ 12 Out-of-pocket operating costs 55,000 18% 13 Discount rate LnLO N a. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Round your present value factor to 3 decimals and round all other intermediate calculations to nearest whole dollar.) Net present value c. The internal rate of return is between what two whole discount rates (e.g., between 10% and 11 %, between 11% and 12%, between 12% and 13%, between 13% and 14%, etc.)? % The internal rate of return is between and d. Reset the discount rate to 18%. Suppose the salvage value is uncertain. How large would the salvage value have to be to result in a positive net present value? Minimum salvage value required to generate a positive present value 2. The company is considering a project involving the purchase of new equipment. Change the data area of your worksheet to match the following: Use Exhibit 7B-1 and Exhibit 7B-2. (Use appropriate factor(s) from the tables provided.) C A 1 Chapter 7: Applying Excel 2 3 Data Example E 4 220,000 Cost of equipment needed Working capital needed 6 35,000 Overhaul of equipment in four years 20,000 8 Salvage value of the equipment in five years 40,000 9Annual revenues and costs: $ 10 Sales revenues 375,000 11 Cost of goods sold 255,000 $ 12 Out-of-pocket operating costs 55,000 18% 13 Discount rate LnLO N a. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Round your present value factor to 3 decimals and round all other intermediate calculations to nearest whole dollar.) Net present value c. The internal rate of return is between what two whole discount rates (e.g., between 10% and 11 %, between 11% and 12%, between 12% and 13%, between 13% and 14%, etc.)? % The internal rate of return is between and d. Reset the discount rate to 18%. Suppose the salvage value is uncertain. How large would the salvage value have to be to result in a positive net present value? Minimum salvage value required to generate a positive present value