Filling in where “?” Are Requirement 1Chapter 7: Applying ExcelDataExample ECost of equipment neededWorking capital neededOverhaul of equipment in four yearsSalvage value of the equipment in five yearsAnnual revenues and costs:Sales revenuesCost of goods soldOut-of-pocket operating costsDiscount rateRequirement 2aPurchase of equipmentInvestment in working capitalSalesCost of goods soldOut-of-pocket operating costsOverhaul of equipmentSalvage value of the equipmentWorking capital releasedTotal cash flows (a)Discount factor (14%) (b)Present value of cash flows (a) x (b)Net present value$60,000$100,000$5,000$10,000Enter a formula into each of the cells marked with a ? belowExhibit 7-8$200,000$125,000$35,00014%Now*Use the formulas from Appendix 7B:Present value of $1 = 1/(1+r)^nPresent value of an annuity of $1 = (1/r)*(1-(1/(1+r)^n))where n is the number of years and r is the discount rate??????1Requirement 2 b??????2??????Years3??????Requirement 2 c4???????5?????|???F

The net present value is the method of capital budgeting that is used to evaluate the project, under…

Answered: Data Example E Cost of equipment needed…

Data Example E Cost of equipment needed Working capital needed Overhaul of equipment in four years Salvage value of the equipment in five years $60,000 $100,000 $5,000 $10,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Filling in where “?” Are

Requirement 1
Chapter 7: Applying Excel
Data
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
Requirement 2a
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 (14%) (b)
Present value of cash flows (a) x (b)
Net present value
$60,000
$100,000
$5,000
$10,000
Enter a formula into each of the cells marked with a ? below
Exhibit 7-8
$200,000
$125,000
$35,000
14%
Now
*Use the formulas from Appendix 7B:
Present value of $1 = 1/(1+r)^n
Present value of an annuity of $1 = (1/r)*(1-(1/(1+r)^n))
where n is the number of years and r is the discount rate
?
?
?
?
?
?
1
Requirement 2 b
?
?
?
?
?
?
2
?
?
?
?
?
?
Years
3
?
?
?
?
?
?
Requirement 2 c
4
?
?
?
?
?
?
?
5
?
?
?
?
?|
?
?
?
F

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