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 11% 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 12 % $ 35,000
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 11% 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 12 % $ 35,000
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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rr
Transcribed Image Text: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
11 % 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
12 %
$
35,000
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 14B-1 and Exhibit 14B-2. (Use appropriate factor(s) from the tables provided.)
Assessment Tool iFrame
A
Chapter 14: Applying Excel
1
2
3
4 Example E
5
6 Working capital needed
7
8
9
10
Sales revenues
11
Cost of goods sold
12 Out-of-pocket operating costs
13 Discount rate
Data
Cost of equipment needed
Overhaul of equipment in four years
Salvage value of the equipment in five years
Annual revenues and costs:
$
$
$
$
$
$
B
210,000
50,000
10,000
35,000
380,000
245,000
85,000
с
10 %
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