Required information Excel Analytics 14-1 (Stotic) Internal Rate of Return [LO14-2, LO14-3) Stauffer 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 Initial working op al racired Oh of the went ter three years Salva value of the water five years $420,000 B0.000 $ 50.000 $ 30,000 Annual revenues and costs Saz Variable wees Fixed out-of-pocket operating conta 3890.000 500.000 $200.000 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 Seckin Excel 3. In the Excel template, using Goal Seek calculate this investment's internal rate of return. If the company's hurdle rate is 18% would it be likely to accept or reject the investment? Why? 4. What is the project's not present value when using a discount rate of 1892 5. If the company wants to achieve an 18% return on this investment, what is the maximum amount that it can spend each year on foed out of pocket operating costs Use Goal Seek to compute your answer Note Thed out of pocker operating costs remain constant for a five years, therefore modifying cell C13 automatically updates ces 13 through 613 6. If the investment in working capital increased from $80,000 to $100,000 would you expect the internal rate of return to increase decrease, or stay the same No computations are necessary to answer this question 7. Refer to the original data Using Goal Seek.calculate the internal rate of return if the investment in working capital increases from $80,000 to $100.000. Not Be sure to return the fixed out of pocket operating costs to the original value of $(200,000 Required information Excel Analytics 14-1 (Stotic) Internal Rate of Return [LO14-2, LO14-3) Stauffer 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 Initial working op al racired Oh of the went ter three years Salva value of the water five years $420,000 B0.000 $ 50.000 $ 30,000 Annual revenues and costs Saz Variable wees Fixed out-of-pocket operating conta 3890.000 500.000 $200.000 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 Seckin Excel 3. In the Excel template, using Goal Seek calculate this investment's internal rate of return. If the company's hurdle rate is 18% would it be likely to accept or reject the investment? Why? 4. What is the project's not present value when using a discount rate of 1892 5. If the company wants to achieve an 18% return on this investment, what is the maximum amount that it can spend each year on foed out of pocket operating costs Use Goal Seek to compute your answer Note Thed out of pocker operating costs remain constant for a five years, therefore modifying cell C13 automatically updates ces 13 through 613 6. If the investment in working capital increased from $80,000 to $100,000 would you expect the internal rate of return to increase decrease, or stay the same No computations are necessary to answer this question 7. Refer to the original data Using Goal Seek.calculate the internal rate of return if the investment in working capital increases from $80,000 to $100.000. Not Be sure to return the fixed out of pocket operating costs to the original value of $(200,000
