Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

Use the above to answer below. I don't know what to do. This is the problem: I need help answering A, B, C! thanks un

image text in transcribed

image text in transcribed

image text in transcribed

Use the above to answer below. I don't know what to do.

This is the problem:

image text in transcribed

image text in transcribed

I need help answering A, B, C!

thanks un advance.

EXHIBIT 14 8 The Net Present Value Method-An Extended Example G A D E F G 1 Year 2 Now 1 2. 3 4 5 3. Purchase of equipment $ (60,000) 4 Investment in working capital $ (100,000) 5 Sales $ 200,000 $ 200,000 $ 200,000 $200,000 $200,000 6 Cost of goods sold $ (125,000) $ (125,000) $ (125,000) S (125,000) S (125,000) 7 Out-of-pocket costs for salaries, advertising, etc. $ (35,000) $ (35,000) $ (35,000) $ (35,000) $ (35,000) 8 Overhaul of equipment S (5,000) 9 Salvage value of the equipment $ 10,000 10 Working capital released $ 100,000 11 Total cash flows (a) $ (160,000) $ 40,000 $ 40,000 $ 40,000 35,000 $150,000 12 Discount factor (14%) (b) 1.000 0.877 0.769 0.675 0.592 S 0.519 13 Present value of cash flows (a) (b) $ (160,000) $ 35,080 $ 30,760 $ 27,000 $ 20, 720 S 77,850 14 Net present value (SUM B13:G13) 31,410 15 16 Note: The discount factors come from Exhibit 14B-1 In Appendix 14B. 17 114 Exhibit 14-8 Exhibit 14-9 Exhibit 14-10 Exhibit 14-11 Exhibit 4 Source: Microsoft Excel EXHIBIT 148-1 Present Value of $1; 1-to)" Periods 1 2 3 4 5 0.713 6 7 8 9 0.703 10 11 0.055 12 13 14 15 46 5% 6% 79 8% 9% 10% 11% 12% 13% 14% 15% 16 17% 18% 19% 20% 21% 22% 23% 24% 256 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 0.683 0.672 0.661 0.650 0.640 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.564 0.551 0.537 0.524 0.512 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 0.467 0.451 0.437 0.423 0.410 0.822 0.784 0.747 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 0.386 0.370 0355 0.341 0.328 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 0.319 0.303 0.2890.275 0.262 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.354 0.333 0.314 0.296 0.279 0.263 0.249 0.235 0.222 0210 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0351 0.327 0.305 0.285 0.266 0.2490.233 0.218 0.204 0.191 0.179 0.168 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.180 0.167 0.155 0.144 0.134 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162 0.149 0.137 0.126 0.116 0.107 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0.162 0.148 0.135 0.123 0.112 0.103 0.094 0.086 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0187 0.168 0.152 0.137 0.124 0.112 0.102 0.092 0.083 0.076 0.069 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 0.084 0.075 0.068 0.061 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.181 0.160 0.141 0.125 0.111 0.099 0.088 0.078 0.069 0.062 0.055 0.049 0.044 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.108 0.095 0.084 0.074 0.065 0.057 0.051 0.045 0.040 0.035 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.163 0.141 0123 0.107 0.093 0.081 0.071 0.062 0.054 0.047 0.042 0.036 0.032 0.028 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.146 0.125 0.108 0.093 0.080 0.069 0.060 0.052 0.045 0.039 0.034 0.030 0.026 0.023 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.153 0.130 -0.111 0.095 0.081 0.069 0.059 0.051 0.044 0.038 0.032 0.028 0.024 0.021 0.018 0.475 0.396 0.331 0.277 0.232 0.164 0.138 0.116 -0.098 -0.083 0.070 9.060 0.051_0.043 0.037 0.031 0.027 0.023 0.020 0.017 0.014 0.456 0.377 0.312 0.258 0.178 0.149 0.124 0.104 0.087 0.073 -0.0610:051 = 0,043 0.037 0.031 0.026 0.022 0.0190.016 0.014 0.012 0.439 0.359 0.294 0.242 0.199 0.164 0.135 0.112 0.093 0.077 0.064 0.053 0044 0.037 0.031 - 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0.0830.068 0.056 0.046 0.038 0.032 0.026 0.022 0.018 0.015 0.013 0.01 0.0090.007 0.406 0.326 0.262 0.211 0.170 0.112 0.091 1074 0.060 0.049 0040 0.033 0.027 0.022_0.0180.015 0.012 0.010 0.0090.007 0.006 0.390 0.310 0.247 0.197 0.158 0.126 0.102 0.082 0.066 0.053 0.043 0.035 0:028 0.023 0.019 0.015 0.013 0.010 0.008 0.007 0.006 0.005 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.059 0.047 0.038 0.030 0.024 0.020 0.016 0.013 0.010 0.009 0.007 0.006 0.005 0.004 0.361 0.281 0.220 0.172 0.135 0.106 0.084 0.066 0.053 0.042 0.033 0.026 0.021 - 0.017 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.347 0.268 0.207 0.161 0125 0.098 0.076 0.060 0.047 0.037 0.029 0.0230.018 0.014 0.01 0.009 0.007 0.005 0.005 0.004 0.003 0.002 0.333 0.255 0.196 0.150 0.090 0.069 0.054 0.042 0.033 0.026 0.020 0.016 0.0120.010 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.321 0.243 0.185 0.141 0.107 0,082 0.063 0.037 0.029 0.022 0.017 0.014 0.011 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.002 0.308 0.231 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0.020 0,015 0.012 0.009 0.007 0.005 0.004 0.003 0.003 0.002 0.002 0.001 0.208 0.142 0,097 0.067 0.046 0.032 0.022 0.015 0.011 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 16 17 18 0.194 19 20 0.215 0.138 21 22 23 24 25 26 27 28 0.116 0.048 29 30 40 EXHIBIT 14B-2 Present Value of an Annulty of $1 In Arroors; 10% Periods 1 2 4% 0.962 1.886 2.775 3.630 4.452 5% 0.952 1.859 2.723 3.546 4.329 6% 0.943 1.833 2.673 3.465 4.212 790 0.935 1.808 2.624 3.387 4.100 8% 0.926 1783 2.577 3.312 3.993 9% 0.917 1759 2.531 3.240 3.890 3 4 5 6 5.242 6.002 6.733 7.435 8.111 5.076 5.786 6.463 7.108 7.722 4.767 5.389 5.971 6.515 7024 4.917 5.582 6.210 6.802 7.360 8 4.623 5.206 5.747 6.247 6.710 4.486 5.033 5.535 5.995 6.418 9 10 11 12 13 14 15 1195 1296 13% 14% 15% 16% 17% 18% 19% 2096 2195 22% 2396 2496 2596 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 1736 1713 1.690 1.668 1.647 1.626 1.605 1.585 1566 1.547 1.528 1.509 1492 1.474 1457 1440 2.487 2.444 2402 2.361 2.322 2.283 2.246 2.210 2.174 2.140 2.106 2.074 2.042 2011 1981 1952 3.170 3.102 3.037 2.974 2.914 2.855 2.798 2.743 2690 2.639 2.589 2.540 2494 2448 2.404 2362 3.791 3.696 3.605 3.517 3.433 3.352 3.274 3.199 3.127 3.058 2991 2.926 2.864 2803 2.745 2689 4.355 4231 4.111 3.998 3.889 3.784 3.685 3.589 3.498 3.410 3.326 3.245 3.167 3.092 3.020 2.951 4.868 4.712 4.564 4.423 4.288 4.160 4.039 3.922 3.812 3.706 3.605 3.508 3416 3.327 3.242 3.161 5.335 5.146 4968 4799 4.639 4.487 4.344 4.207 4078 3.954 3.837 3.726 3.619 3.518 3.421 3.329 5.759 5.537 5.328 5.132 4.946 4.772 4.607 4451 4.303 4.163 4.031 3.905 3.786 3.673 3.566 3.463 6.145 5.889 5.650 5.426 5.216 5.019 4.833 4.659 4.494 4.339 4.192 4.054 3.923 3.799 3.682 3.571 6.495 6.207 5.938 5.687 5.453 5.234 5.029 4.836 4.656 4.486 4.327 4.177 4.035 3.902 3.776 3.656 6.814 6.492 6.194 5.918 5.660 5.421 5.197 4.988 4.793 4.611 4.439 4.278 4127 3.985 3.851 3.725 7.103 6.750 6.424 6.122 5.842 5.583 5.342 5.118 4.910 4.715 4.533 4362 4 203 4.053 3.912 3.780 7.367 6.982 6.628 6.302 6.002 5724 5.468 5.229 5.008 4.802 4.611 4.432 4.265 4.108 3.962 3.824 7606 7191 6.811 6.462 6.142 5.847 5.575 5.324 5.092 4.876 4.675 4.489 4 315 4153 4.001 3.859 7.824 7.379 6.974 6.604 6.265 5.954 5.668 5.405 5.162 4.938 4730 4.536 4.357 4.189 4.033 3.887 8.022 7549 7:120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4775 4.576 4.391 4.219 4.059 3.910 8.2017.702 7.250 6.840 6.467 6.128 5.818 5.534 5.273 5.033 4.812 4.608 4 419 4.243 4.080 3.928 8.3657.839 7.366 6.938 6.550 6.198 5.877 5.584 5.316 5.070 4.843 4.635 4.442 4.263 4,097 3.942 8.514 7963 7469 7025 6.623 6.259 5.929 5.628 5.353 5.101 4.870 4.657 4.460 4.279 4110 3.954 8.649 8.075 7.562 7102 6.687 6.312 5.973 5.665 5.384 5127 4.891 4.675 4.476 4.292 4.121 3.963 8.772 8.776 7645 7.170 6.3596.011 5.696 5.410 5.149 4.909 4.690 4.488 4.302 4.130 3.970 8.883 8.266 7.718 7.230 6.792 6.399 6.044 5.723 5.432 5.167 4.925 4703 4.499 4.311 4.137 3.976 8.985 8.348 7.784 7283 6.835 6.434 6.073 5746 5.451 5.182 4.937 4713 4.507 4.318 4143 3.981 9.077 8.422 7.843 7330 6.873 6.464 6.097 5.766 5.467 5.195 4.948 4.721 4.514 4.323 4.147 3.985 9.161 8.488 7.896 7372 6.906 6.491 6.118 5.783 5.480 5.206 4.956 4.728 4.520 4.328 4.151 3.988 9.237 8.5487.943 7.409 6.935 6.514 6.136 5.798 5.492 5.215 4.964 4.734 4.524 4.332 3.990 9.307 8.602 7984 7441 6.961 6.534 6.152 5.810 5.502 5.223 4970 4.739 4.528 4.335 4.157 3.992 9.370 8.650 8.022 7.470 6.983 6.551 6.166 5.820 5.510 5.229 4.975 4743 4.531 4.337 4.159 3.994 9.427 8.694 8.055 7.003 6.566 6.177 5.829 5.517 5.235 4.979 4.746 4.534 4.339 4.160 3.995 8.951 8.244 7.634 7105 6.642 6.233 5.871 5.548 5.258 4.997 4760 4.544 4.347 4.166 SGS 16 17 18 19 20 8.760 8.306 7.887 7.499 7139 6.805 9.385 8.863 8.384 7.943 7.53 7.161 9.986 9.394 8.853 8.358 7.904 7.487 10.563 9.899 9.295 8.745 8.244 7.786 11.118 10.380 9.712 9.108 8.559 8.061 11652 10.838 10.106 9.447 8.851 8.313 12.166 11.274 10.477 9763 9.122 8.544 12.659 11.690 10.828 10.0599372 8.756 13.134 12.085 11.158 10.336 9.604 8.950 13.590 12.462 11.470 10.594 9.818 9.129 14.029 12.821 11.764 10.836 10.017 9.292 14 451 13.163 12.042 11.061 10.21 9.442 14.857 13.489 12.303 11.272 10371 9.580 15.247 13.799 12.550 11.469 10.529 9707 15.622 14.094 12.783 11654 10.675 9.823 15.983 14.375 13.003 11.826 10.810 9.929 16.330 14.643 13.211 11.987 10.935 10.027 16.663 14.898 13.406 12.137 11.051 10.116 16.984 15.141 13.591 12.278 11.158 10198 17.292 15.372 13765 12 409 11.258 10.274 19793 17.159 15.046 13.332 11925 10.757 21 22 23 24 25 6.743 4154 26 27 28 29 30 7496 40 1 ! Required information The Chapter 14 Form worksheet is to be used to create your own worksheet version of Example E and Exhibit 14-8 in the text Ints eBook 2 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.) Print A B . 1 Chapter 14: Applying Excel 2 3 Data 4 5 $ 340,000 60,000 6 $ IN Example E Cost of equipment needed Working capital needed Overhaul of equipment in four years Salvage value of the equipment in five years Annual revenues and costs: $ 25,000 $ 25,000 9 $ 10 Sales revenues 425,000 $ 11 265,000 12 Cost of goods sold Out-of-pocket operating costs Discount rate $ 65,000 11 % 13 ! Required information 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.) Net present value c. The internal rate of return is between what two whole discount rates (eg., between 10% and 11%, between 11% and 12%, between 12% and 13%, between 13% and 14%, etc.)? The internal rate of return is between % and % a d. Reset the discount rate to 11%. Suppose the salvage value is uncertain. How large would the salvage value have to be to result in a positive net present value? Minimum salvage value required to generate a positive present value

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting What The Numbers Mean

Authors: David Marshall, Wayne William McManus, Daniel Viele

6th Edition

0072834641, 978-0072834642

More Books

Students explore these related Accounting questions