$280 $50 $25 $35 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 Discount rate $375,000 $225,000 $75,000 12% Enter a formula into each of the cells marked with a ? below Exhibit 12-8 Years 3 Now 2 4 5 ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Purchase of equipment Investment in working capital Sales Cost of goods sold Out-of-pocket operating costs Overhaul of equipment Salvage value of the equipment Working capital released Total cash flows (a) Discount factor (14%) (b) Present value of cash flows (a) x (b) Net present value ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? *Use the formulas from Appendix 13B: Present value of $1 = 1/(1+r)^n Present value of an annuity of $1 = (1/r)*(1-(1/(1+r)^n)) where n is the number of years and r is the 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.) Answer is complete but not entirely correct. Net present value $ (47,050) 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.)? X Answer is complete but not entirely correct. The internal rate of return is between 5 % and 6 %