Complete the cash flow projections for project #2. Assume the following: The project has a 10-year life. Revenues are $70,000 in year 1 and increase $5,000 per year thereafter. Operating expenses are 70% of revenues in each year. Initial equipment purchases are $100,000, depreciated on a 7-year MACRS schedule. Equipment purchased will have a resale value of $30,000 at the end of the project. The tax rate is expected to be 35% over the life of the project. The discount rate for the project is 11.5% Net working capital of $25,000 will need to be maintained over the life of the project.

NPV = $13,243.

Finding the IRR (in two ways). Use the Goal Seek tool to find the internal rate of return on this project. Recall that the IRR is the discount rate that makes the NPV=0. So in Goal Seek set the NPV to 0 by changing the discount rate. After finding the IRR using Goal Seek, verify the IRR using the IRR function (enter on line 31, below the NPV).

Q4: What is the IRR under the above assumptions? ____________

Not sure how to use Goal Seek Tool to perform this calculation.