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 16%. Suppose the salvage value is uncertain. How large would the salvage value have to be to result in a positive net present value? \begin{tabular}{|c|c|c|c|c|c|c|c|} \hline 3Da & Data & & & & & & \\ \hline 4E & Example E & & & & & & \\ \hline 50 & Cost of equipment needed & $260,000 & & & & & \\ \hline 6 & Working capital needed & $50,000 & & & & & \\ \hline 7 & Overhaul of equipment in four years & $15,000 & & & & & \\ \hline 8 & Salvage value of the equipment in five years & $20,000 & & & & & \\ \hline 9 & Annual revenues and costs: & & & & & & \\ \hline 10 & Sales revenues & $380,000 & & & & & \\ \hline 11 & Cost of goods sold & $245,000 & & & & & \\ \hline 12 & Out-of-pocket operating costs & $50,000 & = & & & & \\ \hline 13 & Discount rate & 16% & & & & & \\ \hline 14 & & & & & & & \\ \hline 15 & Enter a formula into each of the cells marked w & ha? below & & & & & \\ \hline 16 & Exhibit 128 & & & & & & \\ \hline 17 & z & & & & Years & & \\ \hline 18 & & Now & 1 & 2 & 3 & 4 & 5 \\ \hline 19 & Purchase of equipment & S (260,000) & & 14 & & & E. \\ \hline 20 & Investment in working capital & $(50,000) & & & & & \\ \hline 21 & Salos & & s 380,000 & \$ 380,000 & $380,000 & $380,000 & $380,000 \\ \hline 22 & Cost of goods sold & & $(245,000) & $(245,000) & $(245,000) & $(245,000) & $(245,000) \\ \hline 23 & Out-of-pocket operating costs & & $(50,000) & $(50,000) & $(50,000) & $(50,000) & $(50,000) \\ \hline 24 & Overhaul of equipment & & & & & $(15,000) & \\ \hline 25 & Salvage value of the equipment & & & & & & $20,000 \\ \hline 26 & Working capital released & & & & & & $50,000 \\ \hline 27 & Total cash flows (a) & $(310,000) & $85,000 & $85,000 & $85,000 & $70,000 & $155,000 \\ \hline 28 & Discount factor (14%)(b) & 1.000 & 0.862 & 0.743 & 0.641 & 0.552 & 0.476 \\ \hline 29 & Present value of cash flows (a) (b) & $(310,000) & $73.270 & $63,155 & $54,485 & $38,640 & $73,780 \\ \hline 30 & Net present value & $(6,670) & & & & & \\ \hline 31 & & & & E & & & \\ \hline 32 & 2 "Use the formulas from Appendix 138 & & & & & & \\ \hline 33 & 3 Present value of $1=1/(1+i)rn & & & & & & \\ \hline 34 & 4 Present value of an annuity of $1=(1/r)(1(1/) & (1+r)2n)) & & & & & \\ \hline \begin{tabular}{l} 35 \\ 36 \end{tabular} & 5 Where n is the number of years and r is the dis & count rate & & & & & \\ \hline \begin{tabular}{l} 36 \\ 37 \end{tabular} & & & & & & & \\ \hline \end{tabular}