ACTG 131 Lab Chapter 13: 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: $60,000 $100,000 $5,000 $10,000 Sales revenues Cost of goods sold Out of pocket operating costs Discount rate $20,000 125000 35,000 14%) Enteo tormua no ed wh a 7 Beliw Exhibit 13-6 Years 2 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 2 1.000 Use the formulas from Appendix 138: Present value of $1- 1/1 An Present value of an annuity of $1 (1l11) where n is the number of years and r is the discount rate