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How do I solve for net present value? Data Example E Cost of equipment needed Working capital needed Overhaul of equipment in four years Salvage

How do I solve for net present value?

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Data Example E Cost of equipment needed Working capital needed Overhaul of equipment in four years Salvage value of the equipment in five years Annual revenues and costs: Sales revenues Cost of goods sold Out-of-pocket operating costs Discount rate $60,000 $100,000 $5,000 $10,000 $200,000 $125,000 $35,000 14% Exhibit 13-6 5 Years 3 Now 1 2 4 5 ? ? ? 2 2 ? ? ? ? 2 2 ? ? ? ? ? ? 2 Purchase of equipment Investment in working capital Sales Cost of goods sold Out-of-pocket operating costs Overhaul of equipment Salvage value of the equipment Working capital released Total cash flows (a) Discount factor (14%) (b) Present value of cash flows (a) (b) Net present value ? ? ? ? ? ? ? ? 2 ? ? ? ? ? ? ? 2 2 2

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