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 148-2. (Use appropriate factor(s) from the tables provided.) 1. Chapter 14: Applying Excel 3. Data Example E Cost of equipment needed 6 Working capital needed Overhaul of equipment in four years Salvage value of the equipment in five yoars 9 Annual revenoes and costs: 4. 320,000 50,000 20,000 %24 8. 25,000 10 Sales revenues %24 376.000 11 Cost of goods sold %24 230,000 60,000 10 % 12 Out-of-pocket operating costs 13 Discount rate 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.)
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 148-2. (Use appropriate factor(s) from the tables provided.) 1. Chapter 14: Applying Excel 3. Data Example E Cost of equipment needed 6 Working capital needed Overhaul of equipment in four years Salvage value of the equipment in five yoars 9 Annual revenoes and costs: 4. 320,000 50,000 20,000 %24 8. 25,000 10 Sales revenues %24 376.000 11 Cost of goods sold %24 230,000 60,000 10 % 12 Out-of-pocket operating costs 13 Discount rate 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.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image 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 148-2. (Use appropriate factor(s) from the tables provided.)
1.
Chapter 14: Applying Excel
3.
Data
Example E
Cost of equipment needed
4.
320.000
%24
50,000
6 Working capital needed
Overhaul of equipment in four years
%24
20,000
8.
Salvage value of the equipment in five years
25,000
Annual revenues and costs:
376,000
230,000
10
Sales revenues
%24
11
Cost of goods sold
%24
60,000
10 %
12
Out-of-pocket operating costs
24
13 Discount rate
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.)
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 (e.g., 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
d. Reset the discount rate to 10%. 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
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