Question
1.(Related to Checkpoint 11.1) (Net present value calculation)Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an
1.(Related to Checkpoint 11.1) (Net present value calculation)Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $6,000,000and would generate annual net cash inflows of$1,100,000per year for 9 years. Calculate the project's NPV using a discount rate of 8 percent.
If the discount rate is 8 percent, then the project's NPV is$nothing.
(Round to the nearest dollar.)
2.(Net present value calculation)Big Steve's, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of$95,000and will generate net cash inflows of$21,000per year for11years.
a.What is the project's NPV using a discount rate of11percent?Should the project be accepted? Why or why not?
b.What is the project's NPV using a discount rate of16percent? Should the project be accepted? Why or why not?
4. (Related to Checkpoint 11.4 )(IRR calculation) What is the internal rate of return for the following project: An initial outlay of$11,500 resulting in a single cash inflow of $32,811 in 11years.
The internal rate of return for the project isnothing%. (Round to the nearest whole percent.)
c.What is this project's internal rate of return? Should the project be accepted? Why or why not?
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