The company is considering a project involving the purchase of new equipment. a. What...
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Accounting
The company is considering a project involving the purchase of new equipment.
a. What is the net present value of the project?
The 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 12%. 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 ______
A B C 1 Chapter 12: Applying Excel 1 2 3 Data 4 5 $ 6 $ 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: 290,000 25,000 30,000 25,000 7 $ 8 $ 9 10 Sales revenues $ 11 $ Cost of goods sold Out-of-pocket operating costs 410,000 270,000 60,000 12 $ 13 Discount rate 12 %
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a. What is the net present value of the project? 