Download the Applying Excel form and enter formulas in all cells that contain question marks.

For example, in cell D18 enter the formula "= D10".

Note: The present value factors could be computed using the built-in Excel function PV, but we recommend using the formulas in Appendix 13B.

Verify that your worksheet matches the example in the text.

Check your worksheet by changing the discount rate to 10%. The net present value should now be between $56,518 and $56,535depending on the precision of the calculations. If you do not get an answer in this range, find the errors in your worksheet and correct them.

1 Chapter 13: Applying Excel 3 Data 4 Example C 5 Cost of equipment needed 6 Working capital needed 7Overhaul of equipment in 8 Salvage value of the equipment in 9 Annual revenues and costs 10 Sales revenues 11 Cost of goods sold 12 Out-of-pocket operating costs 13 Discount rate $60,000 $100,000 $5,000 $10,000 4 years years $200,000 $125,000 $35,000 14% 15 Enter a formula into each of the cells marked with a? below 16 Exhibit 13-7 17 18 Sales revenues 19 Less cost of goods sold 20 Less out-of-pocket costs 21 Annual net cash inflows Amount of Present Value Cash Flow Factor of Cash Flows 1.000 1.000 23 Year(s) 25 Purchase of equipment 26 Working capital needed 27 Overhaul of equipment 28 Annual net cash inflows from sales of the product line 29 Salvage value of equipment 30 Working capital released 31 Net present value 32 33 Use the formulas from Appendix 8B 34 | Present value of $1 = 1/(1+rm 35 Present value of an annuity of $1 = (1/r)"(1-(1/(1+rm) 36 where n is the number of vears and r is the discount rate 37 Now Now