Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please explain how you solved this problem if you can, thank you!! This is due by 11:59pm tonight if you can help me beforehand, thank

Please explain how you solved this problem if you can, thank you!! This is due by 11:59pm tonight if you can help me beforehand, thank you!!

The company is considering a project involving the purchase of new equipment. Change the data area of your worksheet to match the following: Use Exhibit 12B-1 and Exhibit 12B-2. (Use appropriate factor(s) from the tables provided.)

1

2

3

4

5

6

7

8

9

10

11

12

13

Chapter 12: Applying Excel
Data
Example E
Cost of equipment needed $210,000
Working capital needed $20,000
Overhaul of equipment in four years $5,000
Salvage value of the equipment in five years $40,000
Annual revenues and costs:
Sales revenues $395,000
Cost of goods sold $270,000
Out-of-pocket operating costs $80,000
Discount rate 11 %

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.)

b. 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.)?

c. Reset the discount rate to 11%. 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_2

Step: 3

blur-text-image_3

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

Core Concepts Of Accounting

Authors: Robert N. Anthony, Leslie Pearlman Breitner

8th Edition

0130406716, 9780130406712

More Books

Students also viewed these Accounting questions

Question

Did the researcher use triangulation?

Answered: 1 week ago

Question

Calculate the cost per hire for each recruitment source.

Answered: 1 week ago

Question

What might be some advantages of using mobile recruiting?

Answered: 1 week ago

Question

What external methods of recruitment are available?

Answered: 1 week ago