Required information Excel Analytics 14-1 (Algo) Internal Rate of Return [LO14-2, LO14-3] Sanders Company has an opportunity to manufacture and sell a new product for a five-year period. The company estimated the following costs and revenues for the new product: Cost of new equipment $420, 000 Initial working capital required $ 95 , 000 Overhaul of the equipment after three years 50 , 000 Salvage value of the equipment after five years $ 30,000 Annual revenues and costs: Sales $850,000 Variable expenses $500, 006 Fixed out-of-pocket operating costs $199 , 000 When the project concludes in five years the working capital will be released for investment elsewhere in the company. Click here to download the Excel template, which you will use to answer the questions that follow. Click here for a brief tutorial on Goal Seek in Excel. Excel Analytics 14-1 (Alao) Part 1 Q Search DELL) XBlue cells can be modified Discount rate 0.0% Now 1 2 3 4 5 Purchase of equipment $ (420,000) nvestment in working capital (80,000) Overhaul of equipment $ (50,000) Salvage value of the equipment 30,000 Working capital released S 80,000 Sales 850,000 $ 850,000 $ 850,000 $ 850,000 850,000 Variable expenses S (500,000) $ (500,000) $ (500,000) $ (500,000) $ (500,000) Fixed out-of-pocket operating costs $ (200,000) $ (200,000) $ (200,000) $ (200,000) $ (200,000 Total cash flows (a) S 500,000) $ 150,000 $ 150,000 S 100,000 150,000 $ 260,000 Discount factor (b) 1.000 1.000 1.000 1.000 1.000 1.000 Present value of cash flows (a) x (b) $ 500,000) $ 150,000 S 150,000 $ 100,000 $ 150,000 $ 260,000 Net present value (SUM B16:G16) S 310,000 O Goal Seek Template Q Search home end insert delete Dll FA F6 F7Required information Required: 1. One method for computing the internal rate of return relies on computing the factor of the internal rate of return as shown below: Factor of the internal rate Investment required of return Annual net cash inflow Can this equation be used to calculate the internal rate of return for Sanders Company? Why? Complete this question by entering your answers in the tabs below. Req 1A Req 1B 1b. If this equation cannot be used to calculate the internal rate of return explain why. Because the net cash inflows are the same every year Because the net cash inflows are not the same every year Q SearchRequired information Required: 1. One method for computing the internal rate of return relies on computing the factor of the internal rate of return as shown below: Factor of the internal rate Investment required of return Annual net cash inflow Can this equation be used to calculate the internal rate of return for Sanders Company? Why? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Which of the following statements is true with respect to this equation? it can be used to calculate the internal rate of return in this instance because the net cash inflows are the same every year. it cannot be used to calculate the internal rate of return in this instance because the net cash inflows are not the same every year. Q Search DELL