Sacco 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 $ $120,000$

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 $ $500,000$

Fixed out$-$of$-$pocket operating costs $ $194,000$

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.

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Excel Analytics $07-01($Algo$)$ Part $2$

$2.$ Refer to the Excel template.

Why does cell B$7$ have an $$120,000$ cash outflow, whereas cell G$10$ shows the same $$120,000$ as a cash inflow?

Will the value of $1\mathrm{.}000$ that is shown in cell B$15$ stay constant or change as the Excel template is used to calculate the internal rate of return? Why?

Will the values of $1\mathrm{.}000$ that are shown in cells C$15$ through G$15$ stay constant or change as the Excel template is used to calculate the internal rate of return? Why?

Will the discount factors in cells C$15$ through G$15$ increase or decrease as the discount rate in cell B$3$ increases? Why?

Once the discount rate in cell B$3$ is changed to some percentage greater than zero, will the amount shown in cell C$16$ always be greater than or less than the amount shown in cell F$16?$ Why?

Would it be correct to conclude that this project has a net present value of $$340,000$ given that this is the amount currently shown in cell B$17?$ Why?

Once this template has been used to calculate the internal rate of return, what dollar amount will appear in cell B$17?$