A 1 Chapter 12: Applying Excel 2 3 Data 4 5 6 7 8 9 10 11 12 13 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: Sales revenues Cost of goods sold Out-of-pocket operating costs Discount rate Net present value $ $ $ $ $ $ $ The internal rate of return is between B 240,000 25,000 30,000 20,000 430,000 270,000 90,000 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.) с 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.)? % and Minimum salvage value required to generate a positive present value 14% % d. Reset the discount rate to 14%. Suppose the salvage value is uncertain. How large would the salvage value have to be to result in a positive net present value?
A 1 Chapter 12: Applying Excel 2 3 Data 4 5 6 7 8 9 10 11 12 13 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: Sales revenues Cost of goods sold Out-of-pocket operating costs Discount rate Net present value $ $ $ $ $ $ $ The internal rate of return is between B 240,000 25,000 30,000 20,000 430,000 270,000 90,000 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.) с 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.)? % and Minimum salvage value required to generate a positive present value 14% % d. Reset the discount rate to 14%. Suppose the salvage value is uncertain. How large would the salvage value have to be to result in a positive net present value?
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:1
2
3
Data
4 Example E
5
Cost of equipment needed
6
Working capital needed
7 Overhaul of equipment in four years
8
0 00
9
10
11
A
Chapter 12: Applying Excel
|12 13
Salvage value of the equipment in five years
Annual revenues and costs:
Sales revenues
Cost of goods sold
Out-of-pocket
Discount rate
operating costs
Net present value
$
$
$
$
$
$
$
The internal rate of return is between
B
240,000
25,000
30,000
20,000
430,000
270,000
90,000
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.)
с
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.)?
% and
Minimum salvage value required to generate a positive present value
14 %
%
d. Reset the discount rate to 14%. Suppose the salvage value is uncertain. How large would the salvage value have to be to result in a
positive net present value?
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