The company is considering a project involving the purchase of new equipment. Cost of equipment needed $420,000 Working capital needed $45,000 Overhaul of equipment in four years $35,000 Salvage value of the equipment in five years is $35,000 Annual revenues and costs: Sales revenues $385,000 Cost of goods sold $210,000 Out-of- pocket operating costs $65,000 Discount rate is 11 %. What is the net present value of the project? The internal rate of return is between what two whole discount rates?
The company is considering a project involving the purchase of new equipment. Cost of equipment needed $420,000 Working capital needed $45,000 Overhaul of equipment in four years $35,000 Salvage value of the equipment in five years is $35,000 Annual revenues and costs: Sales revenues $385,000 Cost of goods sold $210,000 Out-of- pocket operating costs $65,000 Discount rate is 11 %. What is the net present value of the project? The internal rate of return is between what two whole discount rates?
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 3P
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Question
![The company is considering a project involving the purchase of new equipment. Cost of
equipment needed $420,000 Working capital needed $45,000 Overhaul of equipment
in four years $35,000 Salvage value of the equipment in five years is $35,000 Annual
revenues and costs: Sales revenues $385,000 Cost of goods sold $210,000 Out-of-
pocket operating costs $65,000 Discount rate is 11 % . What is the net present value of
the project? The internal rate of return is between what two whole discount rates?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F31315627-3c68-4775-926f-62d39429f1c7%2Fda7c7282-7d1b-4d30-bd4e-7d1d07ef86c9%2Fcty37hs_processed.png&w=3840&q=75)
Transcribed Image Text:The company is considering a project involving the purchase of new equipment. Cost of
equipment needed $420,000 Working capital needed $45,000 Overhaul of equipment
in four years $35,000 Salvage value of the equipment in five years is $35,000 Annual
revenues and costs: Sales revenues $385,000 Cost of goods sold $210,000 Out-of-
pocket operating costs $65,000 Discount rate is 11 % . What is the net present value of
the project? The internal rate of return is between what two whole discount rates?
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