Chapter 13: Applying Excel Data Example E Cost of equipment needed $60,000 Worki

Question

Chapter 13: Applying Excel Data Example E Cost of equipment needed $60,000 Working capital needed $100,000 Overhaul of equipment in four years $5,000 Salvage value of the equipment in five years $10,000 Annual revenues and costs: Sales revenues $200,000 Cost of goods sold $125,000 Out-of-pocket operating costs $35,000 Discount rate 14% Enter a formula into each of the cells marked with a ? below Exhibit 13-6 Years Now 1 2 3 4 5 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 ? *Use the formulas from Appendix 13B: 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 Chapter 13: Applying Excel Data Example E Cost of equipment needed $60,000 Working capital needed $100,000 Overhaul of equipment in four years $5,000 Salvage value of the equipment in five years $10,000 Annual revenues and costs: Sales revenues $200,000 Cost of goods sold $125,000 Out-of-pocket operating costs $35,000 Discount rate 14% Enter a formula into each of the cells marked with a ? below Exhibit 13-6 Years Now 1 2 3 4 5 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 ? *Use the formulas from Appendix 13B: 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

Explanation / Answer

Years Now 1 2 3 4 5 Purchase of Equipment 60000 Investment in working capital 100000 Sales 200000 200000 200000 200000 200000 Cost of goods sold 125000 125000 125000 125000 125000 Out-of-pocket operating costs 35000 35000 35000 35000 35000 Overhaul of equipment 5000 Salvage value of the equipment 10000 Working capital released 100000 Total cash flows (a) 160000 40000 40000 40000 40000 145000 Discount factor (14%) (b) 1 0.8772 0.7695 0.6750 0.5921 0.5194 Present value of cash flows (a) x (b) 160000 35087.72 30778.70 26998.86 23683.21 75308.46 Net present value 31856.95

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.