The company is considering a project involving the purchase of new equipment. Change the data area of your worksheet to match the following: Use Exhibit 14B-1 and Exhibit 14B-2. (Use appropriate factor(s) from the tables provided.)

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Chapter 14: Applying Excel
Data
Example E
Cost of equipment needed	$450,000
Working capital needed	$35,000
Overhaul of equipment in four years	$45,000
Salvage value of the equipment in five years	$35,000
Annual revenues and costs:
Sales revenues	$405,000
Cost of goods sold	$225,000
Out-of-pocket operating costs	$50,000
Discount rate	14	%

a. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Round your present value factor to 3 decimals and round all other intermediate calculations to nearest whole dollar.)

c. 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.)?

d. Reset the discount rate to 14%. Suppose the salvage value is uncertain. How large would the salvage value have to be to result in a positive net present value?

In industries that process joint products, the costs of the raw materials inputs and the sales values of intermediate and final products are often volatile. Change the data area of your worksheet to match the following:

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Chapter 13: Applying Excel
Data
Exhibit 13-7 Santa Maria Wool Cooperative
Cost of wool	$239,000
Cost of separation process	$40,000
Sales value of intermediate products at split-off point:
Undyed coarse wool	$125,000
Undyed fine wool	$154,000
Undyed superfine wool	$77,000
Costs of further processing (dyeing) intermediate products:
Undyed coarse wool	$50,000
Undyed fine wool	$60,000
Undyed superfine wool	$10,000
Sales value of end products:
Dyed coarse wool	$146,000
Dyed fine wool	$204,000
Dyed superfine wool	$96,000

If your formulas are correct, you should get the correct answers to the following questions.

a. What is the overall profit if all intermediate products are processed into final products?

b. What is the financial advantage (disadvantage) from further processing?

c-1. With these new costs and selling prices, what recommendations would you make concerning the companys operations?

c-2. If your recommendation in part (c-1) is followed, what would be the companys overall profit?