Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please help, i get confused at the total cash flows. My answers dont feel right. Also please show the formula you used to calculate the
Please help, i get confused at the total cash flows. My answers dont feel right. Also please show the formula you used to calculate the answer. Will give good feedback if answered today
Chapter 7: Applying Excel 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% 1 A GA Enter a formula into each of the cells marked with a ? below Exhibit 13-8 Years Now 2 3 4 5 Purchase of equipment 60,000 Investment in working capital 100,000 Sales $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 Cost of goods sold $ 125,000 $ 125,000 $ 125,000 $ 125,000 $ 125,000 Out-of-pocket operating costs $ 35,000 $ 35,000 $ 35,000 $ 35,000 $ 35,000 Overhaul of equipment $ 5,000 Salvage value of the equipment 10,000 Working capital released 100,000 Total cash flows (a) (160,000) $ 40,000 $ 40,000 $ 40,000 $ 35,000 $ 240,000 Discount factor (14%) (b) -22400.000 5600.000 5600.000 5600.000 4900.000 33600.000 Present value of cash flows (a) (b) $ 3,584,000,000 $ 224,000,000 $ 224,000,000 $ 224,000,000 $ 171,500,000 $8,064,000,000 Net present value ? A A A *Use the formulas from Appendix 13B: Present value of $1 = 1/(1+r)^n Present value of an annuity of $1 = (1/1)*(1-(1/(1+r)^n)) where n is the number of years and r is the discount rateStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started