D D E G H B 1 Chapter 12: Applying Excel 2 3 Data 4 Example E 5 Cost of equipment needed $60,000 6 Working capital needed $100,000 7 Overhaul of equipment in four years $5,000 8 Salvage value of the equipment in five years $10,000 9 Annual revenues and costs: 10 Sales revenues $200,000 11 Cost of goods sold $125,000 12 Out-of-pocket operating costs $35,000 13 Discount rate 14% 14 15 Enter a formula into each of the cells marked with a ? below 16 Exhibit 12-8 17 18 Now 19 Purchase of equipment 2 20 Investment in working capital ? 21 Sales 22 Cost of goods sold 23 Out-of-pocket operating costs 24 Overhaul of equipment 25 Salvage value of the equipment 26 Working capital released 27 Total cash flows (a) 28 Discount factor (14%) (b) ? 29 Present value of cash flows (a) (b) ? 30 Net present value 31 32 ["Use the formulas from Appendix 13B: 33 Present value of $1 = 1/(1+r)^n 34 Present value of an annuity of $1 = (1/1)*(1-(1/(1+ryn)) 35 where n is the number of years and is the discount rate 36 1 Years 3 N 4 5 ? ? 2 ? ? 2 ? ? ? ? ? ? ? 2 ? ? 2 ? ? ? ? 2 ? 2 ? ? 2 ? ? 2 ? ? ? 27