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

Cost of equipment $240000

Working capital needed. $60000

Overhaul of equipment in four years $15000

Salvage value of the equipment in five years. $25000

Annual revenue and costs :

Sales revenue $370000

Cost of goods sold. $220000

Out of pocket operating costs $75000

Discount rate 16%

What is the net present value of the project?

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.)?

Answer $450000 (wrong answer)

Reset the discount rate to 16%. Suppose the salvage value is uncertain. How large would the salvage value have to be to result in a positive net present value?