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A

$3$ Data

$4$ Example E

$5$ Cost of equipment needed

$6$ Working capital needed

$7$ Overhaul of equipment in four years

$8$ Salvage value of the equipment in five years

$9$ Annual revenues and costs:

$10$ Sales revenues

$11$ Cost of goods sold

$12$ Out$-$of$-$pocket operating costs

$13$

Discount rate

$\backslash$table$[[B,$C$],[,],[$$$75,000,],[$$$150,000,],[$$$9,000,],[$$$15,000,],[$$$280,000,],[$$$155,000,],[$$$55,000,],[8\%,]]$

D

E

F

G

$14$

$15$

Enter a formula into each of the gray cells below. Be sure to format the cells appropriatey. For example, if the cell has

$16$

a dollar amount in it$,$ then the cell should be formatted for dollars.

Exhibit $13-6$

Purchase of equipment

Investment in working capital

Sales

Cost of goods sold

Out$-$of$-$pocket operating costs

Overhaul of equipment

Salvage value of the equipment

Working capital released

Total cash flows $($a$)$

Discount factor $(8\%)($b$)$

Present value of cash flows $($a$)($b$)$

Net present value

'Use the formulas from Appendix $13$B:

Present value of $$1=\frac{1}{(1+r{)}^4}n$

Present value of an annuity of $$1=(\frac{1}{r}{)}^{**}(1-(\frac{1}{(1+r{)}^{}}n))$

where $n$ is the number of years and $r$ is the discount rate

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