Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions