Question: A machine costs (1,000,000 IQD) to purchase and it will provide (250,000 IQD) a year as benefits. The company plans to use the machine

A machine costs (1,000,000 IQD) to purchase and it will provide (250,000

A machine costs (1,000,000 IQD) to purchase and it will provide (250,000 IQD) a year as benefits. The company plans to use the machine for 20 years, then it will sell this machine for (20,000 IQD). The Internal Rate is 12%. Should the company buy this machine?

Step by Step Solution

★★★★★

3.47 Rating (163 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Management Leadership Questions!

A machine costs $980,000 to purchase and will provide $200,000 a year in benefits. The company plans to use the machine for 13 years and then will sell the machine for scrap, receiving $20,000. The...

A company must decide whether to buy Machine A or Machine B: At a 10% interest rate, which machine should be installed? Use an annual cash flow analysis in working this problem. Machine A Machine B...

A person plans to retire within 20 years from now. His monthly salary at the end of month 1 is $60,000 and he plans to save 5% of his monthly salary in a bank account that pays 6% annual compounded...

1. By the history record for U.S. capital market, ________ had the smallest average annual return, and ________ had the greatest standard deviation (total risk) of returns. Large company stocks;...

Gross Income: Year 1: $610,261 Year 2: $644,746 Year 3: $676,561 Year 4: $694,712 Year 5: $713,206 Year 6: $716,050 You have estimated the cost of operations at the company to be 40%. Additionally,...

Suppose the Treasury bill rate is 4% and the market risk premium is 7%. a. What are the project costs of capital for new ventures with betas of .75 and 1.75? b. Which of the following capital...

Using Crystal Ball and the following information: a. Investment A: i. Year 0 Investment cost: Triangular distribution (optimistic: $125,000; most likely: $150,000; pessimistic: $175,000) ii. Year 1-5...

Multiply Choice 1. In the Quake case, the appellate court ruled (a) The letter of intent was a valid contract. (b) Letters of intent are never a valid contract. (c) A letter of intent can be a valid...

. A contract states (1) that Buzz Co. legally exists and (2) will provide 2,000 pounds of wild salmon each week. Which of the following statements is true? (a) Clause 1 is a covenant and Clause 2 is...

. Acontract states (1) that Buzz Co. legally exists and (2) will provide 2,000 pounds of wild salmon each week. Which of the following statements is true? (a) Clause 1 is a covenant and Clause 2 is a...

Esme Companys management is trying to decide whether to eliminate Department Z, which has produced low profits or losses for several years. The companys 2013 departmental income statement shows the...

PHITBIT Limited is a sports wearable company, whose mission was to enhance passion of sports lovers, through innovative devices that collects and maps data to provide invaluable information. The...

Brief description of the Value Investing investment strategy and how it will influence the selection of securities .

Your first assignment is to prepare a master budget for the next fiscal year, starting October 1, 2020. The office manager brought a pile of files on your desk including the past sale records,...

PricewaterhouseCoopers has been found liable in an accounting malpractice case that alleged it failed to detect the $2 billion fraud that led to one of the biggest bank collapses in history. The...

The Civil Rights movement established better working conditions and increased job opportunities for African Americans. How did this affect management? Group of answer choices Increased production and...

The worlds biggest locomotive is the MK5000C, a behemoth of mass 160 metric tons driven by the most powerful engine ever used for rail transportation, a Caterpillar diesel capable of 5 000 hp. Such a...

Olive A/S, incorporated with an authorised capital consisting of one million ordinary shares of ¬1 each, employs 646 persons, of whom 428 work at the factor y and the rest at the head office. The...

Delta Ltd has been developing a lightweight automated wheelchair. The research costs written off have been far greater than originally estimated and the equity and preference capital has been eroded...

Alpha has owned 75% of the equity shares of Beta since the incorporation of Beta. Therefore, Alpha has prepared consolidated financial statements for some years. On 1 July 20X6 Alpha purchased 40% of...

How do you use the four key purchasing criteria personally when buying goods and services? Give an example.