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 14B-1 and Exhibit 14B-2. (Use appropriate factor(s) from the tables provided.)

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.)

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.)?

d. Reset the discount rate to 11%. Suppose the salvage value is uncertain. How large would the salvage value have to be to result in a positive net present value?

A B 1 Chapter 14: Applying Excel 6 HNM N 002 ON Data 4 Example E Cost of equipment needed Working capital needed 7 Overhaul of equipment in four years 8 Salvage value of the equipment in five years 9 Annual revenues and costs: Sales revenues 11 Cost of goods sold 12 Out-of-pocket operating costs 13 Discount rate 480,000 45,000 35,000 20,000 10 430,000 240,000 60,000 11 %