Yoom 3 1 2 4 5 1 Chapter 14: Applying Excel 2 3 Data 4 Example E 5 Cost of equipment needed $60,000 6 Working capital needed $100,000 7 Overhaul of equipment in four years $5,000 8 Salvage value of the equipment in five years $10,000 9 Annual revenues and costs: 10 Sales revenues $200,000 11 Cost of goods sold $125,000 12 Out-of-pocket operating costs $35,000 13 Discount rate 14% 14 15 Entor a formula into each of the cells marked with a 2 below 16 Exhibit 14-8 17 18 Now 19 Purchase of equipment 2 20 Investment in working capital 2 21 Sales 2 Cost of goods sold 3 Out-of-pocket operating costs 4 Overhaul of equipment Es Salvage value of the equipment 6 Working capital released 7 Total cash flows (a) 7 8 Discount factor (14%) (b) 2 9 Present value of cash flows (a) (b) ? 2 O Net present value 1 2 Use the formulas from Appendix 13B: 3 Present value of $1 = 1/(1+rn 4 Present value of an annuity of $1 = (1/0)*(1-(1/(1+r)^n>> 5 where n is the number of years and is the discount rate 6 7 2 ? 2 2 7 2 7 ? 2 2 ? 2 > ? ? 2 ? ? 7 ? ? ? ? 2 7 2 ? 2 ? 2 ? 2 2 Required information The Chapter 14 Form worksheet is to be used to create your own worksheet version of Example E and Exbb 14.3 in the text 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 148-1 and Exhibit 1482. (Use appropriate factor(s) from the tables provided.) A 5 $ 1 Chapter 14: Applying Excel 2 3 Data 4 Example E 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 $ 5 $ 350,000 30,000 20.000 30,000 $ S $ 420,000 270,000 60,000 11% 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 presenta 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 retumis bawan % and % 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 generato a positive procent van