Refer to Exhibit 13-7. Is the return on this investment proposal exactly 14%, more than 14%, or less than 14%? Explain.

Chapter 13 Applying Excol 2 Data Example E Cost of equpment needed Working capital needed overhaul of equipment in four years S60,000 100,000 $5,000 8 Salvage value of the equipment in five year $10,000 Annual revenues and costs 0 Sales revenues 12 Cost of goods sold 12 Ou-of-pocket operating costs 13 Discount rate 14 5 Enter a fonmuta into each of the celrs marked with a ? belo 6 Exhibit 13- S200,000 $125,000 S35,000 14% 19 Purchase of equipment 0 Investment in working capital 22 Sales 22 Cost of goods sold 23 Out-of-pocket operating costs 4 Overhaul of equipment 25 Salvage value of the equipment Working capital released 27 Total cash flows (a) 28 Discount factor (14%) (b) 29 Present value of cash flows (a> ) Net present value 32 32 "Use the formuas from Appendix 13B 33 Present value of $1-110n 34, present value of an annuity of $1 (1 r)'(14141 +rm) 5 here n is the number of years and r is the discount rate 36