A Chapter 12: Applying Excel Data Example E B C D E F G 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 14% Years + Now 1 2 3 4 5 ? ? ? ? ? ? ? ? ??? ? ? B Discount rate 4 5 Enter a formula into each of the cells marked with a ? below 6 Exhibit 12-8 7 8 9 Purchase of equipment 0 Investment in working capital 1 Sales 2 Cost of goods sold 23 Out-of-pocket operating costs 24 Overhaul of equipment 25 Salvage value of the equipment 26 Working capital released 27 Total cash flows (a) ? ? ? ? 28 Discount factor (14%) (b) ? ? ? ? 29 Present value of cash flows (a) x (b) ? ? ? ? ? 30 Net present value 31 32 "Use the formulas from Appendix 13B: 33 34 35 36 37 38 39 40 41 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 ? 272 ? ? ? ? ??? ? ? ? ?