Chapter 11: Applying Excel
Data
Example B
Cost of equipment needed			$60,000
Working capital needed			$100,000
Overhaul of equipment in	4	years	$5,000
Salvage value of the equipment in	5	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 11-2
Sales revenues			$ 200,000
Less cost of goods sold			$125,000
Less out-of-pocket costs			$35,000
Annual net cash inflows			$ 40,000
			Amount of	14%	Present Value
	Year(s)		Cash Flow	Factor*	of Cash Flows
Purchase of equipment		Now	-$60,000	1.000	$ (60,000)
Working capital needed		Now	-$100,000	1.000	-$100,000
Overhaul of equipment		4	-$5,000	0.592	(2,960)
Annual net cash inflows from sales of the product line	1-	5	$ 40,000	?
Salvage value of equipment		5	$ 10,000	0.519	5,190
Working capital released		5	$ 100,000	0.519	51,900
Net present value					?
*Use the formulas from Appendix 11B:
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	THE CORRECT ANSWER FOR ANNUAL NET CASH INFLOWS FROM SALES IS 3.433 but I need to know the formula for excel. this is the only one I need help with.	.