The company is considering a project involving the purchase of new equipment. Change the data area of your worksheet to match the following:

a. What is the net present value of the project?

b. The internal rate of return is between what two whole discount rates (e.g., between 10% and 11%, between 11% and 12%, between 12% and 13%, between 13% and 14%, etc.)?

c. Reset the discount rate to 18%. Suppose the salvage value is uncertain. How large would the salvage value have to be to result in a positive net present value?

A Chapter 14: Applying Excel 1 2 3 Data 4 Example E 5 Cost of equipment needed 6 Working capital needed 7 8 9 10 11 12 13 Overhaul of equipment in four years Salvage value of the equipment in five years Annual revenues and costs: Sales revenues Cost of goods sold Out-of-pocket operating costs Discount rate GA $ GA $ $ $ GA GA $ $ GA $ GA B 220,000 20,000 20,000 25,000 390,000 260,000 65,000 18 %