Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please show excel formulas Chapter 13: Applying Excel Data Example E Cost of equipment needed $60,000 $100,000 $5,000 $10,000 Working capital needed Overhaul of equipment

image text in transcribedimage text in transcribedimage text in transcribedPlease show excel formulas

Chapter 13: Applying Excel Data Example E Cost of equipment needed $60,000 $100,000 $5,000 $10,000 Working capital needed Overhaul of equipment in four years Salvage value of the equipment in five years Annual revenues and costs: Sales revenues $200,000 $125,000 $35,000 Cost of goods sold Out-of-pocket operating costs 14% Discount rate Enter a formula into each of the cells marked with a ? below Exhibit 13-8 Years Now 1 2 3 4 5 Purchase of equipment Investment in working capital 7 7 7 7 7 Sales Cost of goods sold Out-of-pocket operating costs Overhaul of equipment 7 7 7 7 ? Salvage value of the equipment Working capital released Total cash flows (a) Discount factor (14 % ) ( b) Present value of cash flows (a) x (b) ? 2 ? ? ? 7 7 ? 7 Net present value Use the formu las from Appendix 13B: Present value of $1 1/ (1+r)'n Present value of an annuity of $1 = (1/r)(1=(1/(1+rYrn)) where n is the number of years and r is the discount rate Chapter 13: Applying Excel: Exercise (Part 2 of 2) 2. 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 13B-1 and Exhibit 13B-2. (Use appropriate factor(s) from the tables provided.) A 1 Chapter 13: Applying Excel 2 Data Example E Cost of equipment needed Working capital needed 4 5 240,000 6 25,000 Overhaul of equipment in four years 7 20,000 Salvage value of the equipment 8 five years $ 30,000 Annual reventes and costs: 9 10 Sales revenues 415,000 Cost of goods sold 11 270,000 12 $ 80,000 Out-of-pocket operating costs 15% 13 Discount rate 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.) Net present value c. The internal rate of return is between what two whole discount rates (e.q., between 10% and 11% , between 11% and 12% , between 12% and 13%, between 13% and 14%, etc.)? The internal rate of return is between % and % 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? Minimum salvage value required to generate a positive 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

Auditing Algorithms Understanding Algorithmic Systems From The Outside In Foundations And Trends

Authors: Danaƫ Metaxa, Joon Sung Park, Ronald E Robertson, Karrie Karahalios, Christo Wilson, Jeff Hancock, Christian Sandvig

1st Edition

1680839160, 978-1680839166

More Books

Students also viewed these Accounting questions

Question

9. Describe the characteristics of power.

Answered: 1 week ago

Question

10. Describe the relationship between communication and power.

Answered: 1 week ago