2. The company is considering another project involving the purchase of new equipment. Change the data area of your worksheet to match the following: Data C. Example E Cost of equipment needed Working capital needed Overhaul of equipment in four years Salvage value of the equipment in five years. Annual revenues and costs: Sales revenues Cost of goods sold. Out-of-pocket operating costs Capital Budgeting Decisions Discount rate.... $120,000 $80,000 $40,000 $20,000 $255,000 $160,000 $50,000 14%

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 14%. Suppose the salvage value is uncertain. How large would the sal- vage value have to be to result in a positive net present value?