Excel Analytics 14-1 (Algo) Internal Rate of Return [LO14-2, LO14-3] Sacco Company has an opportunity to manufacture and sell a new product for a five-year period. The company estimated the following costs and revenues for the new product: Cost of new equipment Initial working capital required Overhaul of the equipment after three years Salvage value of the equipment after five years $420,000 $ 80,000 $ 50,000 $ 30,000 Annual revenues and costs: Sales Variable expenses Fixed out-of-pocket operating costs $850,000 $500,000 $202,000 When the project concludes in five years the working capital will be released for investment elsewhere in the company. Click here to download the Excel template, which you will use to answer the questions that follow. Click here for a brief tutorial on Goal Seek in Excel. Excel Analytics 14-1 (Algo) Part 1 Required: 1. One method for computing the internal rate of return relies on computing the factor of the internal rate of return as shown below: Factor of the internal rate of return Investment required Annual net cash inflow Can this equation be used to calculate the internal rate of return for Sacco Company? Why? Complete this question by entering your answers in the tabs below. Req 1A Req 1B 1b. If this equation cannot be used to calculate the internal rate of return explain why. O Because the net cash inflows are the same every year. Because the net cash inflows are not the same every year. Req 1A Reg 1B >