Question
NEED HELP! Chapter 13: Applying Excel Data Example E Cost of equipment needed $280,000 Working capital needed $60,000 Overhaul of equipment in four years $30,000
NEED HELP!
Chapter 13: Applying Excel | ||
Data | ||
Example E | ||
Cost of equipment needed | $280,000 | |
Working capital needed | $60,000 | |
Overhaul of equipment in four years | $30,000 | |
Salvage value of the equipment in five years | $25,000 | |
Annual revenues and costs: | ||
Sales revenues | $395,000 | |
Cost of goods sold | $235,000 | |
Out-of-pocket operating costs | $75,000 | |
Discount rate | 15 | % |
a. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Round your present value factor to 3 decimals and round all other intermediate calculations to nearest whole dollar.)
c. The internal rate of return is between what two whole discount rates (e.g., between 10% and 11%, between 11% and 12%, between 12% and 13%, between 13% and 14%, etc.)?
d. Reset the discount rate to 15%. Suppose the salvage value is uncertain. How large would the salvage value have to be to result in a positive net present value?
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