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 12B-1 and Exhibit 12B-2. (Use appropriate factor(s) from the tables provided.) Chapter 12: Applying Excel 2 3 Data 4 Example E $ 340,000 Cost of equipment needed Working capital needed 40,000 Overhaul of equipment in four years 30,000 8 20,000 Salvage value of the equipment in five years 9. Annual revenues and costs: 10 Sales revenues 400,000 Cost of goods sold 11 245,000 12 Out-of-pocket operating costs 65,000 10 % 13 Discount rate 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 10%. 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 net 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 12B-1 and Exhibit 12B-2. (Use appropriate factor(s) from the tables provided.) Chapter 12: Applying Excel 2 3 Data 4 Example E $ 340,000 Cost of equipment needed Working capital needed 40,000 Overhaul of equipment in four years 30,000 8 20,000 Salvage value of the equipment in five years 9. Annual revenues and costs: 10 Sales revenues 400,000 Cost of goods sold 11 245,000 12 Out-of-pocket operating costs 65,000 10 % 13 Discount rate 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 10%. 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 net present value